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Google demands 30% cut from app developers on Play Store

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 today 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% 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.

Today, 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.

An Epic Games spokeswoman declined to comment on Google’s announcement. Netflix and Spotify did not respond immediately to requests for comment.

Developers have bristled at the 30% cut demanded by Google and Apple, saying it is an inflated digital tax that 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.

Last week, a group of app developers said they had formed the nonprofit Coalition for App Fairness to push for changes in the app stores and “protect the app economy.” The 13 initial members include Spotify, Basecamp, Epic and Match Group, which has apps like Tinder and Hinge.

Sarah Maxwell, a spokeswoman for the Coalition for App Fairness, said in a statement that the group looked forward to “engaging with Google” to ensure that any changes fit with its principles and are “in the best interest of app developers.”

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

Google is preparing for further scrutiny. The Justice Department and a coalition of state attorneys general are expected to bring antitrust lawsuits against the company for how it wields its dominance in web search and digital advertising technologies. Its app store policies are not expected to be covered in these suits.

Google has argued that it allows other companies to operate app stores within its Android software. Today, the company said it would make changes in next year’s version of Android to make it easier to use other app stores on its devices without compromising safety.

In the post, Google used Epic as an example of an app developer benefiting from Android’s third-party app stores — noting the availability of Fortnite on Epic and Samsung’s app stores. But Epic, in its complaint, said Google held a monopoly over app distribution because more than 90% of app downloads on Android devices come through the Google Play Store.

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