Home Source code Is this the end of the app store tax?

Is this the end of the app store tax?

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Good morning! Google is testing the ability for apps to use alternative billing options for Spotify. It’s good for consumers, good for Google, but what does it mean for Apple? I’m Ben Brody and since being invited over for “mulled red wine” (??!) I wonder if we were onto something with pandemic restrictions.

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Your move, Apple

Google’s announcement yesterday that it’s going to let Spotify try out non-Android payment options is the culmination of a brutal international, multi-company battle – and Google’s concession that the whole saga has changed the app forever. Store in ways that will take us years to figure out.

Google has launched a “pilot” to enable alternative billing options in certain countries for Spotify, who had been a key architect of the app developers’ unlikely success against Apple and Google.

  • The move, which was effectively an extension of what Google had to do under a new South Korean law, also teased work with a few other developers, essentially implying that it was trying to come up with a system that it could roll out to Android in the coming years.

Don’t get me wrong: this is a concession that the old way of app stores is gone.. It’s been gone for a while (see: Fee Discounts), and it will last a long time in many places. But the era of Google and Apple simply routing in-app purchases through their own payment systems and charging developers 30% for the privilege is coming to an end.

  • There had been a lot of bumps in the model: lawsuits (like Epic Games versus Google), as well as proposed legislation in the states, in Congress, and internationally.
  • They all came together to put down the companies, more or less. Or company management realized they would soon.

The only question now is what replaces it. Google won’t just walk away all money on the table when it owns Android, has the ability to place and frame alternative billing systems, and is always keen to cite its own investments in security and privacy.

  • The case of Apple in the Netherlands seems to provide a useful caveat to the idea that consumers will suddenly be completely free of 30% fees.
  • iOS simply charges a generic fee to dating app developers who want to use alternative billing systems under the country’s new antitrust ruling. It’s 27%.
  • Apple, by the way, seems to be perfectly happy to just take a loss as the government repeatedly fines it for what authorities call non-compliance.

Apple is the elephant in the room. Google’s decision certainly puts pressure on Cupertino.

  • As long as Google and Apple stuck to essentially the same fees in the same form, commissions were basically a reality that developers and consumers alike had to accept. (A lot of people would call this a duopoly.)
  • Now that Google and Apple are parting ways in their approach, everything is to be won, and the forces of antagonism led by Spotify, Epic, Match and others may fall apart.
  • Fees aside for businesses to try out new payment processors, which apps might even have them? In which regions will they exist? What safety standards will they have to meet and what pretexts will be used to send them back? Where and how easily will consumers be able to access it?
  • And it’s an open question how much those systems want to charge.

No one really has the answers to these questions yet. I suppose they will only become clear over the years, thanks to corporate announcements, continuous developer lobbying, court rulings, legislative threats, fines imposed on authorities and more. For now, however, the next step is Apple’s.

— Ben Brody (email | Twitter)

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