Google Starts Offering Third-Party Play Store Billing in Several Countries

Google Starts Offering Third-Party Play Store Billing in Several Countries

According to 9to5Google, Google has extended a pilot program that offers developers of non-gaming Android apps the use of alternative billing systems and lower commissions on its Play Store. Developers based in the European Economic Area (EEA), India, Japan, Indonesia, and Australia can now take part in “User Choice Billing”, resulting in a 4 percent reduction in service fees.

The pilot first launched in March in partnership with Spotify after Google was forced to offer alternative in-app payments in South Korea. Google subsequently begun relaxing the terms of its Play Store for Android apps in the EU in advance of the adoption of the new Digital Markets Act.

Tarifica’s Take

This is an interesting, though not unexpected move by Google. As global media giants, Google and Apple require users of their devices to obtain apps through their respective app stores. Historically, these two companies have used this “gatekeeper” position to force third party apps to use the company’s own billing system for in-app payments, a significant cut of which they then take for themselves.

When Google announced that all apps on the Play service would be required to use Google’s payment service last year, they upset many developers. When Google began enforcing this policy earlier this year, some larger companies, such as Amazon and Hulu simply stopped allowing purchases on Google’s app store. Most app developers had no choice but to comply.

With the EU’s new Digital Markets Act, whose objective is to mitigate the stranglehold of Google and Apple, the two juggernauts will no longer be able to abuse their market position in the European marketplace, including when it comes to payment systems. Google’s action is in advance of this legislation going into effect, but as its “User Choice Billing” program also extends to developers in several other countries outside Europe, it is likely that this move is also partially in response to the backlash from disgruntled app developers.

It’s important to note, however, that this new program is only available to non-gaming apps, when a significant portion of Google’s revenue from in-app purchases in its Play Store comes from gaming apps. While there is no word on whether or to whom Google will extend this program, it is likely that the trend of allowing third-party billing and reducing the gatekeeper’s cut of payments will continue, as gaming apps and developers in other markets will begin to demand the more favorable treatment enjoyed by others.