Google pauses policy that forced developers to pay store tax

Google pauses policy that forced developers to pay store tax

Just over a week ago, Google was fined nearly $113 million in India for forcing its internal billing system on developers who make Android apps. While the fine was huge in itself, the laundry list orders issued by the Indian Competition Commission were A real concern for Google.

The company has now complied with the most controversial guidance by removing the mandatory Google Play billing policy for in-app purchases made in India. In the official update of the company Notes “Requirement for developers to use the Google Play billing system to purchase transactional digital goods and services is discontinued.”

why does it matter?

Andy Boxall / Digital Trends

Google – and Apple, too – have a strict set of rules for payments in mobile apps. Every app listed on the Play Store is required to integrate Google’s payment pipeline into their apps to purchase in-app items or pay for subscriptions. In doing so, Google guarantees a 30% reduction on all transactions.

Developers have long been criticized about this policy, but both Apple and Google are adamant about enforcing the rule. Thanks to the CCI order, Google has temporarily halted mandatory use of the Google Play billing system for users in India, as it prepares to challenge the order and the rest of the proposed changes.

India is the world’s second largest smartphone market, and Android orders 95% huge market share in the country. For comparison, the stakes are much lower in the US, where Android’s market share is less than 50%, according to statista Analytics. Expanded CCI orders will make Google’s smartphone monopoly toothless.

In the past few months, Google had to do some relaxation to the 70/30 model of revenue sharing with app developers, and it has cut its cutbacks as low as 12% in some cases. But completely denying Google any slice of revenue by making the Google Play billing system app optional is a huge deal.

Future problems for Google and Apple

iPhone 14 Pro and Google Pixel 7 Pro with featured image.
Joe Maring / Digital Trends

Earlier this year, the European Parliament passed the Digital Markets Act, which It proposes a comprehensive set of changes For ecosystem gatekeepers like Google and Apple. One of the most notable proposals is forcing Google and Apple to allow third-party payments in apps distributed via the Play Store and App Store, respectively.

Apple has defended its revenue stream from in-app payments more fiercely than Google. The company’s primary argument is that the App Store provides a secure platform for app distribution with robust security checks and access to hundreds of millions of devices, all of which come at a cost. On the other hand, the developers described 30% as exploitative and have been fighting it across continents to lift the billing restrictions.

It is interesting that the law on digital markets in the European Union came into effect On November 1, 2022. Seeking to “end unfair practices by companies that act as gatekeepers,” a comprehensive set of rules covering the online platform economy will be implemented in the next six months.

Starting in March 2024, gatekeepers such as Apple and Google will be required to demonstrate compliance with the new laws. Apart from the abolition of the mandatory internal payment system, DMA also strives to allow sideloading It aims to enable interoperability between messaging services.

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