Google to allow app developers to use rival payment, to cut fees to 12%

Alphabet unit Google said it will from Tuesday cut fees to 12 percent, from 15 percent, for non-gaming app developers on its Google Play App Store and will allow switching to rival payment systems.
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The popular internet search engine said the fee cut applies only to European consumers while the freedom to use another payment system will eventually be expanded to gaming apps as well. The aim of Google is to comply with new EU tech rules.

Google is shifting its strategy since last year where it prefers to bow to regulatory and antitrust pressure with offers of concessions rather than embark on lengthy and distracting fights.

The EU rules known as the Digital Markets Act (DMA), which will come into force next year, require tech giants to allow app developers to use rival payment platforms for app sales or risk fines of as much as 10 percent of their global turnover.

Apple and Google are the most affected by this requirement.

“As part of our efforts to comply with these new rules, we are announcing a new program 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 blog post.

“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,” Estelle Werth said.

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

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

Critics say the fees charged by Apple and Google at their mobile app stores are needlessly high and cost developers collectively billions of dollars a year, underscoring the two companies’ monopoly power.

Google has been hit with more than 8 billion euros in EU antitrust fines in the last decade for anti-competitive practices related to its price comparison service, Android mobile operating system and advertising service.

Though the DMA does not take effect for some time, Google is launching this program now to allow it to work closely with developer partners and ensure compliance plans serve the needs of shared users and the broader ecosystem.

Developers interested in learning more about the program and signing up can visit Help Center.

Google Play has enabled millions of developer businesses to connect with consumers around the world. In the EU alone, the Android ecosystem supported more than 1.1 million jobs, and Android developers generated €7.9 billion in annual revenue in 2021, Google said.

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