Bulletins

Google's plan for EU mobile payments is cutting just 3% off fees

The company is shamelessly calling the bloc's bluff with its proposed 27% service fee.

A hand holds an Android phone displaying the Google app

Google is challenging European competition enforcers who are on the cusp of passing new tech rules.

Photo: Daniel Romero/Unsplash

Google has announced its plans for Android to comply with Europe's nearly final new competition rules, and the company's approach doesn't involve anything remotely like eliminating its 30% commission on many in-app purchases.


Google, which had extracted its fee by forcing apps to adopt the company's mobile billing system, will let app developers offer users in Europe other payment processing options. The catch is, the "service fee" for employing the alternatives will only be 3 percentage points lower than the current commission.

In the case of the 30% fee that many popular apps face, that means developers would still have to pay — and would still pass onto their users — a 27% charge, although Google argues that the vast majority of apps pay a reduced 15% fee right now.

The new plan, which doesn't even apply to the game apps where so many transactions take place, is a clear challenge to European Union authorities. The latter are in the last stages of approving new competition regulations in the Digital Markets Act, and they have viewed the "app store tax" collected by Apple and Google as one of the main Big Tech practices they want to rein in.

In fact, Apple seems to have pioneered the strategy at work: After competition authorities in the Netherlands ruled the company needed to allow alternative billing for dating apps, the company announced it would do so — and just charge a service fee of up to 27% for the privilege. The Dutch enforcers charged Apple repeated fines as result. The iPhone maker seemed happy to absorb the levies, though, given the worldwide stakes, which include not just enforcement actions and new rules in Europe, but South Korea's landmark app store law and the possibility of new tech competition laws in the U.S.

The mobile OS operators have argued that their fees allow them to invest in privacy and security in a way that makes their environments attractive to apps, which should contribute to the upkeep.

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Bulletins