Google Play testing third-party in-app billing system, starts with Spotify

Google has announced a pilot programme that will enable developers to offer an additional billing system to users along with that of Google Play.

This pilot, termed as user choice billing, would initially be with a small number of participating developers starting with Spotify, the tech giant said on March 23.

"This pilot will help us to increase our understanding of whether and how user choice billing works for users in different countries and for developers of different sizes and categories" said Sameer Samat, Vice President, Product Management, Google in a blogpost.

Samat said Spotify was a "natural first partner" given its global footprint and integrations across a wide range of device form factors. He, however, didn't disclose the name of the other partners Google signed up for the trial.

"We also think it’s critical that alternative billing systems meet similarly high safety standards in protecting users’ personal data and sensitive financial information" he said.

This pilot comes as Google and Apple face increased scrutiny over their app store practices in India and various other countries.

In India, both tech giants are facing different probes from the Competition Commission of India (CCI) over the business practices of their app marketplaces.

In the blogpost, Samat said the feature builds on the company’s recent announcement to allow additional payment systems in South Korea after the country passed a law banning app store operators from forcing developers to use their billing systems for in-app purchases.

Spotify termed this as a multiyear global agreement and it anticipates launching the first iteration of this feature across all markets where it offers premium subscription service, including India, later this year.

"Over the coming months, Spotify will work with Google's product and engineering teams to build this new experience, and we'll roll out in countries around the world. Working together, the companies will test and learn, jointly exploring product innovations across the Android platform" the company said in a blogpost.

The users would be presented with a choice to pay with either Spotify's payment system or with Google Play Billing side by side in the app, the Swedish audio streaming service said.

Taking a shot at Apple's restrictive app store practices, Spotify said it would continue to freely communicate with users about its premium subscription service, promote discounts and promotions, and provide free users the ability to sign up for premium subscription directly in the app.

Unclear commission structure

What's not clear is the app commission structure in the new pilot. Google said it plans to share more details "in the coming months".

Spotify also didn't share any further details but told TechCrunch that the commercial terms met its “standards of fairness”.

In South Korea, Google said in November 2021 that transactions through the alternative billing systems would be subject to a service fee but at a 4 percent rate reduction.

The tech giant recently lowered its app store fees for all subscription-based services to 15 percent from 30 percent, effective January 1, 2022.

Google also reduced its commission rate to 15 percent for the first $1 million revenue developers earn using the Play billing system every year in March 2021, which came into effect in July 2021.

Alliance of Digital India Foundation (ADIF), a New Delhi-based think tank comprising of more than 490 entrepreneurs and startups said user choice billing should be made a rule for all developers and not an exception for a select company.

"Extending this to only a few companies without much clarity on the terms and commission rates reeks of preferential treatment – again unfair & discriminatory" the think tank said.

Sijo Kuruvilla George, Executive Director, ADIF said "This is essentially “Google” choice billing and has nothing to do with “user” choice. The fact of the matter remains that this announcement does nothing to address the underlying issues and concerns: the anti-competitive nature of the policy or the impending March 30 deadline for enforcing this policy"

George also urged Google for an extension of choice to all apps and an immediate extension of March 30 deadline for all developers.

In India, Google recently extended the deadline by seven months for app developers to integrate with its Play billing system to help developers with necessary product support for recurring payments through UPI, wallets and other systems in keeping with recurring payment guidelines.

App developers in India now have to comply with the Play billing policy by October 31, 2022. The deadline for other markets ended September 31, 2021, however they had a option to request for a six month extension that ends March 31, 2022.