In partnership with Spotify, Google will trial a system that lets developers offer users an alternative billing system for in-app purchases.
Spotify will be the first company to implement Google's new User Choice Billing initiative that will allow developers to offer an alternative payment option for their apps. Previously, Google and Apple claimed a 3o percent cut for all transactions made in an app that's listed on their app stores. Facing intense criticism from the developer community as well as regulatory bodies, Apple and Google reduced their cut for paid apps and in-app subscriptions to 15 percent for developers that meet certain revenue criteria.
However, the fee still needs to be paid, and any tricks to avoid paying the store tax will result in punitive action. Epic tried to test the waters by offering an external payment system to players purchasing in-game items in Fortnite. Despite being the biggest cash cow for mobile gaming, Fortnite was kicked off the App Store. An ugly court battle followed, leading to some startling revelations regarding Apple and Google’s business policies. Both the companies resisted relinquishing their app store tax, leading to a string of fines and legislations. In markets like South Korea, for instance, Google and Apple have been forced to offer alternative billing systems.
Google is now being proactive, and in a move that can set an industry-wide precedent, the search giant is offering alternative payment systems for apps listed on the Play Store. The company fittingly calls it User Choice Billing. Essentially, Google will allow developers to offer a third-party billing system in their apps alongside Google Play’s own payments process. It will be up to users to choose the one they want to use. The experiment begins with Spotify in 2022.
Google adds that it will test different implementations of user-choice billing, but hasn’t shared any further technical details on how that will work. To trial its radical initiative, Google has onboarded Spotify as part of a multi-year agreement. The idea here is that when Spotify users are trying to pay for a Premium subscription, they will see two payment options in the app — Google Play’s own billing system that guarantees a 30 percent fee to Google, or a custom billing system of Spotify’s choice. While Google has said that it will explore User Choice Billing in select countries, Spotify told TechCrunch it will offer the feature in all markets where its Premium service is available.
Of course, this is not Google flexing its philanthropic muscles. If the tweaked in-app payment rules in South Korea and the Netherlands are anything to go by, Google and Apple will still charge some form of service fee when developers offer a third-party billing system in their apps. Google hasn't clarified if it will allow developers to sell a product or service at a lower cost if users choose the alternative payment system, and how the advertisement of such benefits will work. Apple, for example, prevents app developers from reaching out to users via email with promotions and offers. Spotify has previously filed a complaint against Apple in Europe over its 30 percent taxation policy and the ‘unfair’ restriction it imposes on developers.
Sources: Android Developers Blog, Spotify, TechCrunch
