Google to allow Spotify to test its own in-app billing system

Google to let app developers, starting with Spotify, test their own in-app billing systems

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Google LLC revealed today that it’s working with the music streaming app Spotify Inc. to test out third-party billing options for app developers.

The announcement comes in the wake of massive pressure on Google and its rival Apple Inc. over the fees they collect on transactions in apps on their mobile platforms, Android and iOS. Indeed, Spotify itself has been one of the most notable companies to ramp up that pressure in recent months.

Google had already allowed South Korean app developers to add additional billing systems last year after that country introduced new legislation governing app stores. In a post today on the Android Developers blog, it said it will now be “exploring user choice billing in other select countries,” starting with Spotify and a number of other participating developers, who were not named.

TechCrunch reported that Spotify users will likely get access to new billing options sometime this year. When the new feature arrives, users will then be presented with the choice to pay through Google’s billing system or Spotify’s own.

“Together, we’ll work to innovate in how consumers make in-app purchases, deliver engaging experiences across multiple devices, and bring more consumers to the Android platform,” said Sameer Samat, vice president of product management at Android, said in a blog post.

Google and Apple’s insistence that app users could only use its billing platform has been controversial. By restricting freedom of choice, the companies have been able to extract commissions on payments of up to 30% in some cases, according to the critics.

Angered by these costs, Fortnite game developer Epic Games Ltd. went as far as filing a lawsuit against Apple accusing it of anticompetitive behavior, winning a partial victory in September last year. However, the judge in that case sided with Apple on most counts, rejecting Epic’s claims that the App Store is a monopoly, for example.

Spotify has been a vocal critic of Apple and Google’s app store fees for years, even filing an antitrust complaint over the “Apple tax” in 2019.

Although Google hasn’t said much about the details, it’s assumed that users who opt for Spotify’s alternative billing option will likely pay a lower commission that those who go through Google Play. That said, whatever alternative system Spotify uses is likely to charge its own fees.

Holger Mueller of Constellation Research Inc. said that by allowing Spotify to bill its users directly, everyone has a chance to win, including its customers and Google.

“Spotify customers will get a more portable subscription service, Spotify may get a little more revenue and Google will be able to one up Apple by attracting more content and service providers with its friendlier policy,” Mueller said. “What Google may loose on payment loyalties can be made up in additional workloads for Google Cloud, and that’s the place where it really needs, and wants to grow.”

Apple recently said it will allow some dating apps in the Netherlands to use alternative payment systems in order to comply with a ruling from a Dutch regulator. However, the company reportedly charged a 27% fee on developers who added additional payment methods. The Dutch regulator responded by fining Apple for not satisfying the requirements of its order.

Photo: Victoria_Borodinova/Pixabay

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