Google plans to shut the loophole that lets Netflix, Spotify, and Tinder avoid paying its 30% app tax
September 29, 2020 | technology | No Comments
- Google announced in a blog post on Monday that it’s closing a loophole which allows some developers to side-step its 30% tax on in-app payments.
- Developers will have until September 31 2021 to integrate Google’s billing system.
- Google also said it will make it easier for users to install alternative app stores to its own.
- The change may mean apps such as Netflix, Spotify, and Tinder which have avoided the 30% fee put up their prices on the Play Store.
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Google said it will clamp down on a loophole that allows big developers like Netflix and Spotify avoid paying 30% commission on in-app payments.
Until now, developers have been able to side-step the 30% commission that comes with using Google’s in-app payment system by getting users to enter their card details directly.
Google’s vice president for product management, Sameer Samat, wrote in a blog post on Monday that the company was giving “clarity” on its billing policies.
Samat wrote that “all apps selling digital goods” will have until September 30, 2021 to move to Google’s billing system.
The upshot is that apps that sell you subscriptions, digital media, or virtual items will have to shift to this system and pay Google’s 30% levy, and it may mean an accompanying rise in prices.
Business Insider has approached Spotify, Netflix, and Tinder for comment.
Samat wrote that Google’s own apps will also be subject to the commission, and that the changes would only impact less than 3% of developers.
This announcement from Google comes after a drawn-out fight between Apple and developers on a similar mandatory commission on the App Store.
This resulted in major developers including Spotify, Epic Games, and Match Group forming an alliance called the “Coalition for App Fairness” on Thursday. It also comes after Apple waived its usual fee for a Facebook feature in a rare concession.
Epic Games is currently suing both Apple and Google over their fees.
Unlike Apple, which only allows iOS devices to support its App Store, Samat wrote in his blog post that Google plans to make it easier for users to get their apps from places other than the official Play Store.
“We believe that developers should have a choice in how they distribute their apps and that stores should compete for the consumer’s and the developer’s business,” Samat wrote, adding that the release of Android 12 next year will include functionality to make it easier for users to install alternative app stores on their phones.
However, there appears to be some nuance here. Samat suggested that developers would not be able to tell users how to avoid Google’s in-app tax within their Google Play app.
He wrote, emphasis ours: “Developers have asked whether they can communicate with their customers directly about pricing, offers, and alternative ways to pay beyond their app via email or other channels.
“To clarify, Google Play does not have any limitations here on this kind of communication outside of a developer’s app.”
Google’s post appears geared towards heading off accusations of anti-competitive behavior.
Developers have complained in the past that Apple wields monopolistic power by only allowing iOS devices to use its App Store, which in turn forces developers to pay its 30% payment commission. Google allows Android users to install apps from stores other than its Play Store, though the Play Store is still the primary way most people access apps.
Google is under particular antitrust scrutiny in the US at the moment, with the Department of Justice (DOJ) getting ready to announce an investigation into the company — though this probe will reportedly focus on Google’s dominance as a search engine.