In-app payments: Ball in Google’s court after Apple’s new App Store policy

Bengaluru: Apple’s decision to allow app developers to communicate directly with users about payments will put additional strain on Google’s efforts to enforce its own in-app billing system in India, Indian Internet entrepreneurs said.

Startups have been up in arms against Google, which has mandated developers on the Play Store to only use its own built-in payments services that charges 15-30% commission on in-app purchases from April. Developers want to continue using external payments links, which charge a fee of only about 1-2%.

Apple follows the same policy but commands negligible market share in India.

The iPhone maker updated its App Store rules on Friday to allow app developers to contact users directly about payments. This step may enable developers to bypass the App Store commission of 15% or 30%. They will be able to ask users for basic information, such as names and email addresses, “as long as this request remains optional”, Apple said. It still does not allow developers to integrate alternate payment options within the app.

“Google was in recent times seen to match and mirror Apple point to point as far as billing and payment policies on their PlayStore goes. Should Google look to match this policy of Apple as well, it would render their announcement with the March 2022 deadline moot,” the Alliance of Digital India Foundation said in a statement.

Apple proposed the changes in August in a legal settlement with small app developers in the US. In September, a judge ordered Apple to loosen control of its App Store payment options but said Epic Games had failed to prove that antitrust violations had taken place.

“The fact that Apple has still not relented on allowing alternative payment systems to be embedded directly in their apps, thereby resulting in subpar user experiences in comparison to in-app billing, sticks out like a sore thumb,” said Sijo Kuruvilla George, executive director, ADIF. “It is crucial now to ensure that the efforts towards making the app economy a fair marketplace are sustained.”

Google (Alphabet Inc.) and Apple have been under fire globally for allegedly exploiting their market dominance and charging high commissions to app developers. In August this year, South Korea passed a law to prevent the Big Tech firms from forcing developers to use their in-app billing systems.

“It still doesn’t address the core issue that app developers want to have the freedom to provide other payment options where the commission is less than 2%,” said Murugavel Janakiraman, the founder of Bharat Matrimony. “At the time of customers wanting to subscribe to service it should be frictionless.”

On Friday, startups termed Google’s move to slash commissions charged to developers on in-app purchases as a “deflect and distract” tactic while contentious issues, such as the search giant allegedly dictating prices and restricting other payment options on its Play Store, remain unaddressed.