Google demands 30 pct cut from app developers in its Play Store

Daisuke Wakabayashi, The New York Times

Posted at Sep 29 2020 07:04 AM

A logo of Google is seen at an office building in Zurich, Switzerland July 1, 2020. Arnd Wiegmann, Reuters/File

OAKLAND, Calif. — Google said it would no longer allow any apps to circumvent its payment system within the Google Play Store that provides the company a cut of in-app purchases.

Google said in a blog post Monday that it was providing “clarity” on billing policies because there was confusion among some developers about what types of transactions require use of its app store’s billing system.

Google has had a policy of taking a 30 percent cut of payments made within apps offered by the Google Play Store, but some developers including Netflix and Spotify have bypassed the requirement by prompting users for a credit card to pay them directly. Google said companies had until Sept. 30, 2021, to integrate its billing systems.

The way the Google and Apple app stores collect fees has become an especially contentious issue in recent months after Epic Games, maker of the popular game Fortnite, sued Apple and Google, claiming they violated antitrust rules with the commissions they charge.

On Monday, a federal judge in California’s Northern District Court in Oakland heard testimony from Epic Games and Apple to determine whether Apple can continue to ban Fortnite, Epic’s popular game, from its app store. The hearing, in which each side debated the size of the app distribution market and Apple’s power over it, offered a preview of the antitrust case before it goes to trial sometime next year.

In its lawsuit against Google, Epic Games said it tried to offer users the option of using its own billing system, which costs less than Google’s version. Epic said Google rejected the app twice. When the game maker went ahead and did it anyway, Google removed Fortnite from its app store.

Developers have bristled at the 30 percent cut demanded by Google and Apple, saying it hobbles their ability to compete. And because the two companies control almost all of the world’s smartphones, many developers gripe that they have no option but to adhere to their policies and pay the commissions.

Google said the enforcement of its billing policies would apply to a small fraction of its app developers. It said only 3 percent of app developers on Google Play offered in-app purchases and, within that group, only 3 percent were not using Google’s billing system.

© The New York Times Company