It was revealed by Google on Thursday that the Google Play app store would support in-app billing for subscription services, allowing companies like Spotify and Bumble to charge users in the United States without leaving the apps. Between 15 and 30 percent of in-app purchases are retained by Google Play and the App Store for iOS devices, respectively.
Services like Spotify can cut costs by accepting credit card payments within the app itself. Apps that charge users directly will still be required to give Google a cut of their revenue, according to a Google support document. It has been confirmed that Spotify membership payments can still be made using Google Play billing.
According to the supporting documentation, “the service price the developer pays will be lowered by 4% when a consumer chooses to use an alternate billing system.” The change in policy that Google Play made on Thursday marked a dramatic departure from Apple’s App Store standards and a notable concession by a major mobile app store to allow third-party billing.
As Spotify continues to battle Apple over its policies, this shows that the two companies have formed an alliance on app store concerns. Some app developers have sought a much more significant shift from Google than what has been implemented. Developers would like not to have to fork over a percentage of their revenue to a mobile app store in order to charge users directly.
Unlike Apple’s iOS, Google’s Android platform supports “sideloading,” or the installation of software from locations apart from the Google Play Store. Spotify has spoken out forcefully against app store fees and guidelines, arguing that they are anti-competitive. Almost all of the criticism has been aimed at Apple.
Apple has continued to fight against direct billing in regulatory bodies and the courts in the vast majority of the countries in which it operates. To comply with local rules, Apple has a comparable scheme in South Korea that enables direct billing. Apple stresses the significance of its App Store’s standards for customer safety and privacy.
In a blog post published this week, Spotify lauded Google’s action and said that it had begun paying consumers directly for premium memberships in numerous regions across the world. With this move, Google “has made a bold step to help level the playing field,” the company added, but this is just the beginning.
The new policy, known as “User Choice Billing,” was unveiled by Google in March. The “pilot” was initially conducted in Australia, India, and Europe, then on Thursday, the corporation expanded the test to the United States, Brazil, and South Africa. Google has announced that the trial program is open to all non-gaming apps that follow its user interface criteria for pricing.
According to the New York Times, Spotify and Apple got into an argument in October over whether or not the music streaming service could include a button in its apps that would allow users to purchase the service without paying Apple’s 30 percent cut through the App Store.
On Thursday, Spotify’s stock price increased by less than 10%. The share price of Bumble rose by more than 10%. On a day when markets were generally up following the release of a lower-than-expected inflation estimate, Google’s stock rose by more than 7 percent.