Google requiring Android apps on the Play Store to use its IAP billing system next year

As rumored last week, Google today announced that it will require all Android apps downloaded from the Play Store to use its billing system for in-app purchases (IAPs). The company also noted how its own first-party apps will adapt to this.

Today, Netflix, Spotify, and other big services do not use Google Play In-app Billing. Consumers directly enter their credit card information with that third-party. As such, those services get the entire cut of the payment/subscription. Google says this is the case with “less than 3% of developers with apps” on the Play Store.

The alternative (with In-app Billing) sees users give their payment information to the Play Store, which acts as a middle party. The big advantage of this approach is that customers do not have to repeatedly enter their billing information and can cancel services from a consolidated “Subscriptions” page in Google Play. However, companies have to forgo a percentage to Google for facilitating the transaction.

Google today is now requiring all developers selling digital goods to use Play In-app Billing, which is what the remaining 97% of all apps are already doing:

We want to be sure our policies are clear and up to date so they can be applied consistently and fairly to all developers, and so we have clarified the language in our Payments Policy to be more explicit that all developers selling digital goods in their apps are required to use Google Play’s billing system.

This has always been the rule, but the company now plans to widely enforce it for all developers. Google argues that this is “fair” given what it does to manage the Play Store on an infrastructure and security-level. 

Not only does this approach allow us to continuously reinvest in the platform, this business model aligns our success directly with the success of developers.

Google notes how developers are “free to communicate with [customers] about alternative purchase options,” but only outside of apps. Consumption-only reader apps are also allowed.

Google Play allows any app to be consumption-only, even if it is part of a paid service. For example, a user could login when the app opens and the user could access content paid for somewhere else.

This change in enforcement/language clarification will not come into full effect until September 30, 2021, to give developers time to adapt. Google will also bring its first-party apps into alignment with this policy. The big exception today is the YouTube family of services.