An Android statue is displayed in front of a building on the Google campus on January 31, 2022 in Mountain View, California. Google parent Alphabet will report its fourth-quarter earnings on Tuesday after the closing bell.
Justin Sullivan | Getty Images
Google The Play App Store will allow Spotify and Bumble to charge US users for subscriptions directly in their Android apps, Google announced on Thursday.
Typically, Google Play and Apple’s App Store for iPhone take between 15% and 30% of digital in-app sales through their billing platforms.
Allowing companies to charge users’ credit cards directly in an app allows services like Spotify to reduce those fees. Google said in a support document that apps that charge users directly will still have to pay Google a percentage of their app sales. Spotify will continue to accept subscription payments via Google Play billing.
“When a user chooses to use an alternative billing system, the service fee that the developer pays will be reduced by 4%,” a supporting document explains.
Thursday’s move is a significant concession by a major mobile app store to allow third-party billing and a significant difference in Google Play’s policies versus Apple’s App Store policies. It’s also a sign that Spotify and Google have an alliance on app store issues, even as Spotify continues to battle Apple over its rules.
But Google’s change isn’t as drastic a step as some app makers are calling for. Developers want the ability to bill customers directly without paying a cut to a mobile app store. Google’s Android operating system allows for “sideloading,” or the ability to install apps from sources other than Google Play.
Spotify has vociferously opposed the app store’s fees and rules, saying they are anti-competitive. Most of his anger was directed at Apple.
Apple still doesn’t allow direct billing in most of the countries it operates in, and is fighting it with regulators and the courts. Apple has a similar program in Korea to allow direct billing due to regulations in that country. Apple says App Store policies are important to user security and privacy.
Spotify welcomes Google’s decision in a blog post in which it said it began charging consumers directly for premium subscriptions in several countries around the world this week. “Google has taken a bold step to level the playing field, but this is just the beginning,” the company said.
Google announced the policy change, called User Choice Billing, in March. The company is calling it a “pilot” and expanded the test to the US, Brazil and South Africa on Thursday in addition to previous regions including Australia, India and Europe.
Google said the pilot is available to non-game apps that meet user interface guidelines on how to implement charging.
In October, Spotify argued with Apple over one of its rules over whether it could create a button in its apps to email customers with a purchase link that bypasses Apple’s App Store cut, according to New York Times.
Shares of Spotify rose 8% on Thursday. Bumble shares rose more than 6%. Google also rose 7% in a strong day for markets after the lower-than-expected inflation report.