Since its launch in 2008, Google Play has been the go-to destination for Android users to get their apps. Although not as heavily curated as Apple's App Store, the Play Store provides a common framework for Android apps to meet quality and security standards. One drawback for developers has always been the lock-in to Google's payment system with its 15% revenue cut when they want to monetize their products. That changes today with the announcement that Google is going to pilot a program allowing developers to use the billing system of their choice in addition to the Play Store’s.

The nitty-gritty behind the announcement is spelled out in a post on the Android Developers Blog. The change in policy stems directly from a South Korean law that mandates that app stores must accept payments via third-party billing systems in addition to their integrated payment systems. Similar legislation has also been moving through congress which likely spurred Google to action as well.

All transactions made through the Play Store are subject to fees ranging from 10 to 30%. Those fees (which amounted to over $40 billion in revenue in 2021) help to maintain the infrastructure that makes the Android ecosystem so attractive to developers, all while also earning Google a lot of dough. The majority of developers pay a 15% fee. In South Korea, where third-party billing is already widely active, whatever fee a developer would have paid to Google will be reduced by 4% when they opt to process payments outside the Play Store.

Spotify is partnering with Google to test this new service in more regions. When the external billing method goes live, Spotify users will have the choice of paying either through the Play Store or Spotify’s own payment system. Spotify anticipates the service becoming available in "countries around the world" later this year, without specifying where exactly.

It’s hard to guess whether developers and consumers will embrace this new shift. Third-party billing providers would need to have fees of less than 4% to entice developers. Barring that, they would have to provide some concrete benefit to consumers for them to embrace the alternative option.

Thanks: Moshe