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Google closes Android loophole that let Netflix and Spotify avoid app tax - and prices might increase because of it

Adam Smith
·3-min read
 (Mika Baumeister )
(Mika Baumeister )

Google has said it will be enforcing rules which mean Android apps in its play store will have to use the company’s payment system – meaning Google will take a 30 per cent cut of all transactions.

“We have clarified the language in our Payments Policy to be more explicit that all developers selling digital goods in their apps are required to use Google Play’s billing system”, wrote product management vice president Sameer Samat said in a blog post.

As a result of this change, Google’s policies now come in line with Apple’s – which have caused a fuore between it and game developer Epic.

Currently, developers have been able to avoid the tax on transactions by letting users input card details directly.

However, "all apps selling digital goods" will be required to move to the new system.

Google says that 97 per cent of developers already abide by these rules, however large players including Netflix and Spotify have been able to avoid it.

“We only collect a service fee if the developer charges users to download their app or they sell in-app digital items, and we think that is fair”, Samat wrote.

The change will be implimented by 30 September, 2021.

The controversy between the 30 per cent tax on Apple and Google’s store has resulted in a coalition of developers including Epic Games, Spotify, Protonmail, Match Group (which owns Tinder) and others coming together to fight it.

Called the ‘Coalition for App Fairness’, it attempts to stop what it claims are anti-competitive policies and a lack of consumer freedom on Apple’s ecosystem.

It is currently unclear whether companies will now take a similar stance against Google.

At the same time, the search giant said it would also make it easier to let users download apps from stores that are not its own Play Store.

In Android 12, next year’s Android operating system, Google says it will make the user experience for installing another app store on the device better.

Many smartphones, such as Samsung and Huawei, come with their own app stores separate to the Play Store.

It is also a very popular practice in China, where Google is not available.

“Even if a developer and Google do not agree on business terms the developer can still distribute on the Android platform. This is why Fortnite, for example, is available directly from Epic's store or from other app stores including Samsung's Galaxy App store”, Google wrote.

Whether this will placate other companies remains to be seen, as Google has a de-facto monopoly over app downloads, as seen when its commercial Android ecosystem was removed from Huawei devices by order of President Trump.

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