UPDATED 13:16 EST / SEPTEMBER 25 2020

APPS

Report: Google will push for more major app developers to use its payment system

Google LLC is readying an update to the Play Store’s guidelines that will put more pressure on app developers to use its payment system, Bloomberg reported today.

The report comes at a time when both Google and rival Apple Inc. are facing scrutiny over their rules concerning in-app purchases. Apple, which also requires developers to use its own payment system, today carved out a temporary exception for Facebook Inc. virtual events following criticism by the social network

Like Apple’s App Store, the Play Store requires most apps to use Google’s payment processing system for transactions involving subscriptions, in-app items and video game upgrades. The search giant takes a 30% fee. However, until now, a number of major companies, including Netflix Inc. and Spotify Technologies SA, have not been complying with this requirement, instead offering users other means of purchasing their services that avoid Google’s 30% fee.

The updated guidelines will seek to remedy that, sources have told Bloomberg. It’s unclear exactly how Google plans to go about persuading noncompliant companies to adopt its payment system. The sources only said that the policy update will “clarify” the way the Play Store guidelines communicate the requirement.

The new guidelines could be introduced as early as next week, they added, though the search giant is expected to give major developers time to update noncompliant apps. Those apps are “unlikely to be immediately removed,” according to the report. That’s presumably intended to give Google time to negotiate with key app developers such as Spotify and address any potential pushback it may encounter.

Apple’s rule requiring iOS app developers use its payment system was a key factor behind Spotify’s decision to file an antitrust complaint against the company in the European Union last year. EU officials later launched a formal probe into the practice. More recently, video game giant Epic Games Inc. sued Google and Apple over their payment system rules after both companies removed its Fortnite game from their app stores for violating those rules.

From an antitrust standpoint, Google is in a somewhat different position than Apple. Google allows companies to distribute Android apps via marketplaces other than its Play Store if they wish to avoid its 30% fee, while Apple doesn’t allow developers to circumvent the App Store. The search giant also lets apps direct users to an external website for making purchases, whereas Apple disallows the practice. 

“As an open platform, Android allows multiple app stores. In fact, most Android devices come with at least two stores right out of the box, and users can install others,” a Google spokesperson told Bloomberg. “For developers who choose to distribute their apps on Google Play, our policy has always required them to use Play’s billing system if they offer in-app purchases of digital goods.”

The statement appears to address Google’s reported plan to clarify its payment rules to major app developers such as Netflix. “We are always working with our partners to clarify these policies and ensure they are applied equitably and reasonably,” the spokesperson added.

Image: Google

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