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Google to enforce 30% cut from app developers

Written by Wency Chen Published on 

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Think that’s high? The rate goes up to 50% for app stores in China, the world’s largest Android market.

Google on Monday said it will close a loophole on its Google Play Store that allows some app developers to bypass the 30% fee on in-app transactions by introducing other payment methods aside from Google’s billing system by September 30.

Although Google has already had the rules, some developers, including Netflix, Spotify, and Tinder, managed to avoid the fee by letting users to pay them directly through credit card. Google’s statement on Monday provided “clarity on billing policies”.

“We’ve always required developers who distribute their apps on Play to use Google Play’s billing system if they offer in-app purchases of digital goods, and pay a service fee from a percentage of the purchase,” read the post, which the company published on its website for Android developers.

According to Google, the adjustments only apply to a small fraction of apps, since less than 3% of developers with apps on Play sold digital goods over the last 12 months, and of this 3%, the vast majority (nearly 97%) already use Google Play’s billing.

“We have already integrated Google Play Store’s payment system, so the policy doesn’t have much impact on us,” said Joe He, the founder and CEO of music streaming app Boomplay. It’s a wholly-owned subsidiary of Transsnet, a joint venture established by Transsion Holdings and Chinese Internet tech leader NetEase in 2017. Boomplay has a focus on the African market, available on Google Play Store, Samsung Apps and Amazon Store, but a majority of its users are from the Google Play Store.

“But speaking of the business itself, a 30% cut is indeed too high. I hope Google Play Store can allow more payment methods to reduce the pressure on developers and users,” he said.

Google’s policy is similar to Apple’s, which also charges 30% from in-app purchases but is notably stricter. Because iOS users don’t have alternatives to the App Store, and the phone maker generated more revenues than Google from its app store.

The rule is hardly popular among the developer community.

Fortnite creator Epic Games sued the two app store operators over antitrust violations after Fortnite was removed from both Google Play Store and Apple App Store after Epic introduced its own payment system to avoid the 30% cut.

But while many developers complain about the fee, it is still tiny compared to what those developers have to pay in the world’s largest Android app market—China.

In China, the Google Play Store is not available and third-party app stores, including offerings from handset vendors Xiaomi, Huawei, Oppo, and Vivo (app stores are usually pre-installed on devices) along with software companies Tencent, TapTap, and 360, the 30% cut falls on the low side.

“The app store operators usually take a cut ranging from 30% to 50% off game sales,” a NetEase employee told KrASIA about the common practice in the gaming industry, which is a contentious issue.

Earlier this month, two long-anticipated games—Lilith Games’ Rise of Kingdoms and Mihoyo’s Genshin Impact—announced that they wouldn’t release on Xiaomi and Huawei’s app stores, since they failed to reach an agreement on revenue split. Lilith Games reportedly argued for a 70% cut of the revenues.

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