Google squeezes App publishers for a cut of their sales

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Google is going to enforce their policy for in-app purchases. Many app publishers are circumventing the Google payment solution. The policy states that 30% of app purchases through their Play Store must go to the tech giant.

Google’s parent company, is cracking down on app publishers who have been avoiding paying Google the required 30% cut of all in-app purchases done through the company’s Play Store.

Google collects their commission directly from the sale when it is processed through the company’s proprietary billing service. If an app provider bypasses this service, however, then Google has no oversight of the transaction, and no ability to skim their percentage off the top.

The Alphabet unit plans to issue updated guidelines shortly that will reinforce a requirement for most apps to use Google’s billing service for in-app content downloads, game upgrades and subscriptions.

Major players have been bucking the system

Technically, Google’s terms of service have required app providers to use Google’s billing service for years. However some major app publishers such as Netflix, Spotify, Match. and Epic Games, have been circumventing the rule. For example, Netflix, Spotify have their users pay directly using a credit card. This placed them in open defiance of the imperious Google Play system. Match Group joined the revolt last year when they set up a similar payment process for their Tinder dating app.

In August, Epic Games started letting players buy in-game upgrades for its popular Fortnite video game via a method that paid Epic directly. In response, Google and Apple pulled Fortnite from their app stores and Epic sued both tech giants.

Legal battles are heating up

Now Apple has counter-sued, demanding “restitution and disgorgement of all earnings, profits, compensation, benefits, and other ill-gotten gains obtained by Epic as a result of its conduct.”

The fight is spreading, however, and its getting nasty. Epic, Match and Spotify are forming a coalition to fight Apple and Google. More and more companies are joining forces to fight the two tech giants,

International legal problems may be putting Google in a weak position. A recent European Union antitrust ruling requires the company to stop bundling its app store with Search and Chrome on Android phones in Europe. (Google is fighting the charges.) These EU cases may convince even more app makers to circumvent Google.

“Around the world, everyone is looking for ways to push back against American tech,” said Ben Schachter, an analyst at Macquarie Group Limited. “This feels like a natural way to go about it.”