For a long time now, Apple and Google have had total control in most countries regarding how customers pay for subscriptions or app purchases. App developers could not lead their customers to a third-party billing system, which would ideally take a lesser cut of their profits than Google or Apple.
This issue once again reared its head late last year when Epic Games (the creators of Fortnite) took Apple and Google to court regarding the provision of a third-party billing system where users could purchase in-game products without going through Apple’s or Google’s systems.
Google and Apple were understandably reluctant since, at the time, they took a 30% cut on any app sold on their respective platforms. This means that they would stand to lose quite a big chunk of revenue should a third-party billing option be made available.
Fast-forward to 2022 and facing more pressure from app developers and government regulatory bodies from different countries regarding fair competition, it seems Google is softening its stance regarding this issue.
Starting with Spotify first, Google will now let users choose how they want to pay for the services they subscribe to, either through a third-party system offered by that service or Google’s own 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,” reads an excerpt from Google’s official blog.
“Users who’ve downloaded Spotify from the Google Play Store will be presented with a choice to pay with either Spotify’s payment system or with Google Play Billing. For the first time, these two options will live side by side in the app,” part of Spotify’s statement regarding the partnership reads.
Spotify aims to roll out the third-party billing option to all the 184 markets it operates in, but Google has cautioned that the pilot will begin with a few regions first and then slowly expand to the other regions once they have the experience. Which regions will get the first test ride is yet to be made public at the time of writing this article.
The two companies have remained silent on how they will be sharing the revenue generated from the third-party billing option. Following the tussle with Epic Games, the 30% cut was reduced to 15% by both Google and Apple for the first $1million made by an app developer. Google says that since this shift in its pricing model, 99% of developers qualify for the 15% service fee on its app store.
“Android has always been about openness and user choice… This step is an important milestone for mobile app stores, and I can’t imagine a better first partner than Spotify. They value choice as much as we do and understand the importance and continued investment in Android and Play to the health of the entire ecosystem. This is an exciting first step, and we look forward to adding new partners and learning how this model could be expanded across the platform,” said Sameer Samat, Vice President, Product Management at Google.
