Google (GOOG, GOOGL) recently announced a pilot program that will allow Spotify (SPOT) users to circumvent the Google Play billing system.
Spotify is one of the companies that has openly fought Google and Apple Hold in their respective app stores. Apple charges a 30% fee for large developer apps and in-app purchases, while Google Play charges a 30% or 15% fee depending on a variety of factors. Anura Grana, senior software and IT analyst at Bloomberg Intelligence, told Yahoo Finance Live (video above).
“This is a very profitable business for both Google and Apple,” he said. “They aren’t going to give it [up] simply. You need to force this out of their hands. So I think they’re trying to appease regulators now, but I don’t think it’s going to go away easily. “
In 2020, Google won $ 11.6 billion in-app purchases worldwide, as CNBC previously reported, citing quotes provided by analytics firm Sensor Tower. Lana added that the partnership between Google and Spotify itself could be a big win for Spotify in terms of revenue and can be ignored by Google.
“The immediate question, as you know, is whether Google’s revenue contribution or loss is enough to make a dent,” he said. “… the real impact is on small businesses like Spotifys like Match (MTCH), so it’s them who will benefit from this.”
Both developers and regulators have been chasing app store pricing for some time. Developers like Spotify have long resisted the fees Google and Apple take and what they’re forced to accept, but regulators say that corporate app store practices are anti-competitive. I’m afraid to be the target. Last Thursday, the EU passed the Digital Markets Act. It states that Apple may have to allow alternative app stores on the iPad and iPhone.
The story continues
Both Google and Apple App Store practices have been questioned.Image: Getty
Avoid critics and regulators
This partnership with Spotify could be an effort for the company to loosen its understanding of app store pricing on its own terms, as the industry is increasingly subject to regulatory oversight. According to Lana, the move is an effort to stop the push of regulators and could be a win for everyone involved.
“They’re actually going to experiment with how many users leave the ecosystem and pay.” “… If the loss isn’t that big, they might relax the rules a bit more. Make everyone happy.”
Elsewhere, tech giants are also facing legal pressure to change the behavior of their app stores. Epic Games is now on the stand-off of the well-known app store, as Fortnite makers filed a proceeding against Apple in 2020 over this issue. The proceedings continue today as both companies have appealed the judge’s 2021 decision in the proceedings.
The story dates back to early August 2020. It was when Epic offered Fortnite players the opportunity to pay directly using the new in-app features. Epic filed its first proceeding against an iPhone maker in the US District Court in Northern California when Apple pulled the game back.
Google Play also stopped the Fortnite app in 2020 and hasn’t been available since.
Allie is a technical reporter for Yahoo Finance. She can be contacted at [email protected]. Follow her on her Twitter @ agarfinks.
Read the latest financial and business news from Yahoo Finance.
Follow Yahoo Finance twitterInstagram, YouTube, Facebook, Flipboard, LinkedIn.