Google will start allowing the developers of non-gaming apps to offer European users alternate payment systems. In a blog post, Google outlines its plans to comply with the Digital Markets Act (or DMA), a piece of legislation aimed at regulating big tech.
The DMA passed through the European Parliament earlier this month, but it isn’t expected to go into force until spring 2023. But Google is rolling out the changes ahead of time to make sure that its plans “serve the needs” of users.
The legislation requires “gatekeepers,” or companies with a market capitalization of €74 billion or over, to follow a set of rules meant to promote competition among digital platforms. Failing to comply could lead to fines of up to 10 percent of a firm’s global revenue or 20 percent in case of repeat offenses.
Android developers who choose to use an alternate payment processor will still have to pay Google a service fee for each transaction on the first $1 million they make within one year. However, Google says it will reduce this fee by 3 percent, meaning the company will take a 12 percent or lower cut from every transaction. If developers make more than $1 million in one year, Google will charge developers a 27 percent fee on transactions (3 percent less than the up to 30 percent fee).
Google justifies the fee on a support page, noting that it “has never been simply a fee for payment processing” 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, so long as those payment systems meet Google’s requirements. That means serving users in the European Economic Area (which covers European countries in and outside the EU), as well as preventing users not located 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 triggered several lawsuits in the US, including from a group of state attorneys and Tinder parent company Match Group. The claims made in these suits mirror those in Epic Games’ case against Apple, which alleged Apple had a monopoly on payment systems in the App Store. That trial concluded with a mixed ruling, although Epic Games’ case against Google is still underway.
Despite adjusting its policies in Europe, Google has made minimal accommodations to developers in the US — and when they do, it has mostly been carving out exceptions for big companies. Google allegedly cut a deal with Netflix in response to its complaints about its fees on subscriptions and later rolled out a pilot that allows certain developers to use their own payment systems, beginning with Spotify. Google also allowed Match Group to use an alternate billing system ahead of its 2023 trial.