Google Play pilots a third-party billing option to select partners globally, starting with Spotify; Google said user choice billing still involves a service fee

Amid increasing global regulations over app stores and their commission structures, Google today announced the launch …

TechCrunch 2022-03-24 Sarah Perez

Context & Ripple Effects

Google's move reverses the tighter posture in which Play required apps to use its billing system after services including Spotify had bypassed its in-app purchase cut before Google required Play billing. The initial partner program creates a controlled opening rather than removing Google's role from checkout.

Related coverage shows the program subsequently broadened to more countries and non-gaming developers as Google expanded access beyond the first testers, while Spotify later deployed it in more than 140 markets across a much wider global footprint.

First-order effects

Spotify gains a sanctioned way to offer an alternative payment route on Google Play, while Google retains a service fee for transactions using user choice billing.
Google can test third-party billing with a major subscription app without fully abandoning Play's payment and fee infrastructure.

Second-order effects

Other non-gaming developers gain a precedent for seeking similar terms; Google later added Bumble and extended the pilot to the US, Brazil, and South Africa as the tester group and markets grew.
Alternative billing becomes a lever for subscription apps to reduce Play commissions, although Spotify's later savings were not disclosed in the related coverage.

Third-order effects

App-store payment policy is moving from mandatory proprietary checkout toward regulated, fee-bearing choice: platforms may preserve revenue through service charges even when developers use other billing providers.
If expansion continues, the competitive question shifts from whether developers can offer outside billing to how platform fees, eligibility, and user flows determine the practical value of that option.

The trend: Google Play is adapting its gatekeeper model by permitting alternative billing while retaining a paid role in the transaction.

Discussion

@eldsjal Daniel Ek on x
Today @GooglePlay and @Spotify announce a groundbreaking agreement that enables customer choice and sets the stage for what the next generation platform should look like: https://newsroom.spotify.com/ ...
@econ_marshall Marshall Steinbaum on x
Question is if this is going to be available only to powerful upstream apps with existing user bases & loyalty, while the firms that control operating systems and app stores squeeze smaller players to the bone to compensate. It's why we need real platform neutrality. https://twit…
@benedictevans Benedict Evans on x
Interesting. But only one company and doesn't say whether Spotify is still paying Google commission on payments using its own system (as Apple has required) https://twitter.com/...
@nickstatt @nickstatt on x
This is extremely interesting, and it's also extremely lame that neither company feels like disclosing what this new behind-closed-doors commission rate is. But it does raise the possibility Google could walk away from the 30% Play Store cut. https://techcrunch.com/...
@andreas_schwab @andreas_schwab on x
#DMA matters before being finalised 😊 @EP_SingleMarket https://twitter.com/...
@davey_burke Dave Burke on x
“This pilot will allow a small number of participating developers to offer an additional billing option next to Google Play's billing... This is a significant milestone and the first on any major app store — whether on mobile, desktop, or game consoles” https://android-developers…
@ow Owen Williams on x
wow, google just straight up went there and started testing allowing apps to implement third-party payment gateways alongside their own. here for it https://android-developers.googleblog.c om/ ... https://twitter.com/...
@mgsiegler M.G. Siegler on x
Yeah yeah, we don't know the cuts. We were never going to know them (we will eventually, of course). But this isn't actually about user discounts. It's about natural, healthy competition on the platform/services side.
@caseynewton Casey Newton on x
Could be big, but weird that neither company is saying what the cut is. If I don't get a discount from using Spotify billing, why do I care about this? https://twitter.com/...
@rstephens Robert Stephens on x
@mgsiegler I'm having trouble imagining how there can be a better experience than Apple's “my subscriptions” dashboard where I'm just a single click with subscribe or unsubscribe (including Hide my Email)
@richlightshed Rich Greenfield on x
🔥 Big Win for @Spotify $SPOT Particularly important as Spotify is far more penetrated/mature in iOS markets with lots of growth to come on @Android / @GooglePlay markets https://twitter.com/...
@jason_kint Jason Kint on x
YES!!! Unlock the revenue, gatekeepers. And finalize the EU DMA as belt and suspenders tomorrow. https://techcrunch.com/...
@randypicker Randy Picker on x
Google and Spotify have announced a new deal regarding alternative payment systems in the Google Play store. It is hard to know what to make of that without knowing what Google will continue to charge Spotify for other services. (1/)
@randypicker Randy Picker on x
I don't see how we assess today's announcement without more transparency about what is going on separately between Spotify and Google. The omission from the announcements today suggests that info is likely to come out slowly if at all. (6/6)
@mgsiegler M.G. Siegler on x
@rstephens Right. Apple has a huge huge huge natural advantage on several fronts. It's ridiculous that they haven't had to compete on payment options. They're always going to win a huge % of time.
@mgsiegler M.G. Siegler on x
This (at least reads like) how it should work. Google, as the platform owner has a natural edge in simplicity and streamlined OS integration. Spotify, as the service, should be allowed to entice users to sign up via their rails with discounts, etc. Free market stuff.
@pkafka Peter Kafka on x
It should also be easy for Apple to do. But Apple has committed itself to fighting to keep its service fees for as long as it can. Meanwhile Google - where app $ is way less important - gets a useful merit point it hopes to use in the ongoing antitrust wars.
@davidmarcus David Marcus on x
Wow. That's a huge deal. Congrats @eldsjal and team! https://twitter.com/...
@ballmatthew Matthew Ball on x
Heck yeah https://twitter.com/...
@hoeglaw Richard Hoeg on x
@GameOverThirty Not sure the billing system really matters if Apple/Google simply charges 27% for access. (The deal specifics are notably light on the license fee question.)
@kifleswing Kif on x
On paper, this looks like the biggest concession in terms of third-party mobile app store billing so far BUT There are a lot of caveats, and Spotify will still have to pay a fee to Google even for payments it takes on its own through the app https://www.cnbc.com/...
@mgsiegler M.G. Siegler on x
Live look at Apple: [Gif from Game of Thrones of the army charging a lone fighter]
@pkafka Peter Kafka on x
Most meaningful because it's the thing Spotify - and Epic Games - wants Apple to do. https://twitter.com/...
@stevekovach Steve Kovach on x
Nothing in here about what cut Google will take. Google already said it'd take 26% in S Korea. But a nice lil poke in the eye at Apple by picking Apple's frenemy Spotify as the first partner. https://android-developers.googleblog.c om/ ...
@spotifynews @spotifynews on x
Today alongside @GooglePlay, we're excited to announce a groundbreaking multiyear agreement that enables customer choice and sets the stage for what the next-generation platform should look like. https://newsroom.spotify.com/ ...
@chrismlacy Chris Lacy on x
Curious to see some UX mockups and learn more, but Google Play's User Choice Billing seem undoubtedly a step in the right direction of competition. https://android-developers.googleblog.c om/ ...

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