Google now allowing app developers to use rival payment systems to cut fees

Jul 19, 2022, 11:42 PM UTC
2 mins read
Google now allowing app developers to use rival payment systems to cut fees

In a move to comply with new EU tech regulations, Google said it will lower fees for non-gaming app developers on its Google Play Store who switch to rival payment methods starting Tuesday to 12% from 15%.

The giant search engine in the world said that the charge cut only applies to users in Europe and that gaming applications would soon be allowed to accept other payment methods as well.

The action highlights a shift in Google’s strategy from last year, where it now prefers to submit to pressure from regulators and antitrust authorities with offers of concessions rather than get involved in protracted and unproductive battles.

The Digital Markets Act (DMA), an EU regulation, will go into effect the following year and requires tech giants to allow app developers to use competing payment processors for app sales or risk fines of up to 10% of their global turnover.

“As part of our efforts to comply with these new rules, we are announcing a new programme to support billing alternatives for EEA (European Economic Area ) users,” Estelle Werth, Google’s director for EU government affairs and public policy, said in a blogpost.

“This will mean developers of non-gaming apps can offer their users in the EEA an alternative to Google Play’s billing system when they are paying for digital content and services,” she said.

The EEA includes the 27 EU countries, Norway, Iceland and Liechtenstein.

“When a consumer uses an alternative billing system, the service fee the developer pays will be reduced by 3%,” Werth said.

“Since 99% of developers currently qualify for a service fee of 15% or less, those developers would pay a service fee of 12% or lower based on transactions through alternative billing for EEA users acquired through the Play platform.”

The fees that Apple and Google demand in their mobile app stores, according to critics, are too high and cost developers billions of dollars annually, underscoring the two companies’ monopoly dominance.

EU antitrust fines against Google for engaging in anti-competitive behavior with regard to its price comparison service, Android mobile operating system, and advertising service total more than 8 billion euros over the past ten years.

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