Google Play launches pilot programme for third-party billing option

In one of the most significant moves from Google, the company announced the launch of a pilot programme that allows a few developers to offer an additional billing system alongside Google Play’s billing system.

The announcement comes even as Google is facing scrutiny on its app stores payment structure by the Competition Commission of India (CCI). Globally too Google and Apple have been facing regulatory heat due to their app store practices.

South Korea last year amended its telecommunications act to prohibit app store operators to use only their proprietary billing systems. While announcing the pilot Google acknowledged these changes. In a blog by Sameer Samat, VP product management, Google said that this comes as it has allowed additional billing systems in South Korea and in line with its principles, “…we are announcing we will be exploring user choice billing in other select countries.”

Samat in his blog further added: “This pilot will allow a small number of participating developers to offer an additional billing option next to Google Play’s billing system and is designed to help us explore ways to offer this choice to users, while maintaining our ability to invest in the ecosystem. This is a significant milestone and the first on any major app store — whether on mobile, desktop, or game consoles.”

To begin with Google is partnering with Spotify with the new billing system. “Spotify will be introducing Google Play’s billing system alongside their current billing system, and their perspective as our first partner will be invaluable. This pilot will help us to increase our understanding of whether and how user choice billing works for users in different countries and for developers of different sizes and categories,” added Samat’s blog.

Meanwhile in India the Alliance of Digital India Foundation (ADIF) called Google’s ‘user choice billing’ announcement for ‘select’ developers a clear admission of guilt & an illusion of choice tactic. 

Sijo Kuruvilla George, Executive Director, ADIF said, “This is essentially “Google” choice billing and has nothing to do with “user” choice. The fact of the matter remains that this announcement does nothing to address the underlying issues and concerns: the anti-competitive nature of the policy or the impending March 30th deadline for enforcing this policy.”

“I am yet to read the fine print but from what I understand in South Korea they have allowed a third party billing system, but they still charge 11 per cent for payments happening through those payment gateways. If this is the case then they are certainly not solving the problem,” said Snehil Khanor, co-founder and CEO, TrulyMadly.com.

Google has been facing backlash from Indian developers and intervention by the CCI forced Google to extend the Play Billing deadline to October in India. However, for the rest of the world, come March 30, developers will have to pay high commissions and mandatorily use the Google Billing System.

“With their measures and announcements, Google is trying to create an illusion of choice. We at ADIF urge for an extension of choice to all apps and an immediate extension of the March 30th deadline for all,” added George.

There has been global backlash against both Apple and Google with South Korea recently being the first to take legislative action against the anti-competitive and restrictive practices of app store operators by barring "the act of forcing a specific payment method to a provider of mobile content."

Google however, did not divulge any further details of the billing systems. Rather the blog said that the pilot with Spotify will help them in understanding user behavior. “This pilot will help us to increase our understanding of whether and how user choice billing works for users in different countries and for developers of different sizes and categories.”

“We wouldn’t be here if it weren’t for the close partnership with our valued developers and using their feedback to keep evolving. For example, based on partner feedback and in response to competition, our pricing model has evolved to help all developers on our platform succeed and today 99% of developers qualify for a service fee of 15% or less,” said Samat in his blog.

This initiative comes ahead of the announcement of Google already reducing commissions from 30% to 15% for the first $1 million of revenue developers earn using the Play billing system each year, following a similar move by Apple. The company said that due to this pricing model shift, 99% of developers qualify for a service fee of 15% or less on its app store.

2020: Google says apps that sell digital goods within the Play store have to use its billing systems where it charges 30% commission

March 2021: Says it will slash fee to 15% for developers globally when they make the first $1mn in annual revenue

Oct 2021:  Says will cut the service fee for all subscriptions on Google Play to 15% from Jan 1, 2022

Google extends this deadline in India to March 31, 2022; this is further extended to Oct, 2022

ADIF moves CCI seeking interim relief      

Dec 2021: Google files a writ petition in Karnataka HC regarding CCI’s probe in Play Store payment rules