Google to allow app developers to use rival payment systems, to cut fee

Google’s Alphabet unit said it will cut fees from Tuesday to 12%, from 15%, for developers of non-game apps on the Google Play App Store switching to competing payment systems, as it moves to comply with new technology rules in the European Union.

The world’s most popular online search engine said the fee cut applies only to European consumers while the freedom to use another payment system will eventually be extended to gaming apps as well.

The move underscores a change in Google’s strategy from last year where it now prefers to succumb to regulatory and antitrust pressure through offers of concessions rather than engage in long, distracting battles.

European Union rules known as the Digital Markets Act (DMA), which will take effect next year, require tech giants to allow app developers to use competing payment platforms for app sales or risk fines of up to 10% of their global sales volume.

Apple and Google are the hardest hit by this requirement.

“As part of our efforts to comply with these new rules, we are announcing a new program to support billing alternatives for European Economic Area (EEA) users,” Estelle Wirth, director of government affairs and public policy at Google, said in a blog post.

“This means that non-game app developers can offer their EEA users an alternative to Google Play billing when they pay for digital content and services,” she said.

The European Economic Area includes the 27 countries of the European Union, Norway, Iceland and Liechtenstein.

“When a consumer uses an alternative billing system, the service fee paid by the developer will be reduced by 3%,” Wirth said.

“Because 99% of developers are currently eligible for a service fee of 15% or less, these developers will pay a service fee of 12% or less based on transactions through alternative billing for EEA users acquired through the Play platform.”

Critics say the fees Apple and Google charge for their mobile app stores are unnecessarily high and collectively cost developers billions of dollars annually, highlighting the strength of the two companies’ monopoly.

Google has received more than €8 billion in antitrust fines in the European Union in the past decade due to anti-competitive practices related to its price comparison service, Android mobile operating system and advertising service.

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