Google will allow non-gaming app developers in the European Economic Area (EEA) to offer alternative payment systems. In a blog postGoogle outlines its plans to comply with the Digital Markets Act (or DMA), a piece of legislation aimed at regulating big tech.
the DMA adopted by the European Parliament earlier this monthbut it is not expected to come into effect until spring 2023. But Google is rolling out the changes ahead of time to make sure its plans “meet users’ needs.”
The legislation requires “gatekeepers”, or companies with a market capitalization of €74 billion or more, to follow a set of rules designed to promote competition between digital platforms. Non-compliance can result in fines of up to 10 percent of a company’s global revenue or 20 percent for repeated violations.
Android developers who choose to use an alternative payment processor will still have to pay Google a service fee for every transaction over the first $1 million they make within a year. However, Google says it will cut this fee by 3 percent, meaning the company will take a discount of 12 percent or less on every transaction. If developers make more than $1 million in one year, Google charges developers a 27 percent fee on transactions (3 percent less than the standard 30 percent).
Google justifies the fee on a support pagenoting that it “has never been just a payment processing fee” and instead “reflects the value provided by Android and Play.”
As part of the new policy, Google commits to no longer removing apps that use alternative payment systems as long as those payment systems meet Google’s requirements. That means serving users in the EEA (which covers European countries within and outside the EU), as well as preventing users who are not in the EEA from accessing the payment system. Developers must also provide customer support for the billing service they choose.
Google’s in-app payment policy has already led to several lawsuits in the US, including from a group of state attorneys and Tinder parent company Match Group. The claims in these lawsuits mirror those in Epic Games’ case against Apple, which alleged that Apple had a monopoly on payment systems in the App Store. That lawsuit ended with a mixed ruling, though Epic Games’ case against Google is still pending.
Despite adjusting its policies in Europe, Google has made minimal changes to developers in the US — and when they do, it’s usually made exceptions for large companies. Google reportedly struck a deal with Netflix in response to its complaints about its subscription fees and later rolled out a pilot that would allow certain developers to use their own payment systems, starting with Spotify. Google also allowed Match Group to use an alternate billing system ahead of the 2023 trial.