Google has announced that European users of non-gaming apps would soon be allowed to use third-party payment options. This was to comply with the Digital Markets Act (DMA), which the European Union wants to use to regulate tech.
While Google is already complying, the DMA only passed through the parliament this month and won’t become active until 2023. However, Google claims it wants to be ready to meet the needs of users as stipulated in the legislation.
The company wrote in a blog post: “As part of our efforts to comply with these new rules, we are announcing a new program to support billing alternatives for EEA users. This will mean developers of non-gaming apps can offer their users in the EEA an alternative to Google Play’s billing system when they are paying for digital content and services.”
DMA tasks companies with a market capitalization of at least €74 billion (referred to as gatekeepers) to stop stifling competition from smaller companies or startups. Any gatekeeper in violation could land fines of up to 20 percent of its global revenue, especially for repeat offenders.
However, Google still intends to take a cut when an app developer opts for an alternative payment method. The search and advertising giant will reduce the charges on the first $1 million of such transactions in a year to 12 percent, from 15 percent. When the developer makes more than $1 million in a year, Google will take 27 percent instead of the standard 30 percent.
To justify its charges, Google says the point was not simply a fee for processing payment but for the value provided by Android and Play. It also points out that 99 percent of developers qualify to pay 12 percent due to their annual revenue.
Google also said it would stop removing apps that use third-party payment options as long as they comply with its rules. The requirements include preventing app users outside the EU and European Economic Area (EEA), which covers some markets outside Europe, from accessing the alternative payment methods. The developer also has to arrange for customer support when it allows people to pay outside Google’s platform.
Before announcing this concession, Google found itself the subject of multiple lawsuits in its home country. It was sued by Tinder’s parent company Match Group and a collection of state attorneys on grounds similar to Epic Games’ suit against Apple. They allege that Google enjoys a monopoly on payment in the Play Store. Apple’s trial ended with no clear winner, and both parties are appealing parts of the judgment.
Meanwhile, Google has not announced any concession in the US, although it has made exceptions for bigger companies. For example, Google gave Netflix a better deal to keep the app in the Play Store. It also lets Spotify integrate third-party payment, which is expected to expand to include other select apps. Google also allowed Match Group to use an alternative billing method, although the two are headed to trial.
Google’s rival, Apple, is also facing criticisms and sanctions for its App Store payment policies. The company has been forced to allow third-party payment methods in several markets, including the Netherlands and Japan. Apple had been paying a weekly fine of 50 million euros for failing to meet third-party payment conditions in the Netherlands.