Excerpts from the reactions that caught my eye.
Amit Daryanani, Evercore ISI: Google Allows Third Party Payments for Spotify. Is Apple Next? It is unclear how Apple will respond to this news, but they have had a relatively contentious relationship with Spotify. Simplistically, if AAPL were to follow Google and allow just Spotify to use third party payments would actually be a net positive for the bottom line as currently Apple collects no revenue from Spotify. If the program rolled out wider (which we think is logical), we could see a more negative impact although we remain unconvinced that consumer adoption of alternative payment systems is a foregone conclusion. It is more likely that Apple may respond to competitive pressure by lowering the fee it charges.
Martin Peers, The Information: Apple Pressured by Google-Spotify Deal. It may only be a matter of time before the Berlin Wall of the mobile app ecosystem, Apple’s rigid App Store rules, falls. Google’s announcement today that its Google Play app store will allow a “dual billing option” in U.S. apps, starting with Spotify, puts pressure on Apple to follow suit. Giving consumers a choice about the payment systems they use for in-app purchases, such as subscriptions, is precisely what Apple CEO Tim Cook has long resisted. But as Apple is already battling foreign regulators about this issue and faces legislation in Congress mandating a less restrictive policy, Cook’s stance looks increasingly untenable.
Mark Bergen, Lucas Shaw and Mark Gurman, Bloomberg: Google Tests Letting Apps Like Spotify Offer Own Billing. The move isn’t likely to spur Apple to make similar changes. For one, the company has said it doesn’t make revenue deals with individual developers, regardless of their size. More importantly, the iPhone maker last year said it would allow media apps, including music apps like Spotify, to link users to the web to complete payments, which would circumvent Apple’s 15% to 30% fee entirely. However, that solution wouldn’t allow Spotify to build an embedded payment system within their app as will now be allowed on Android.
Sarah Perez, Techcrunch: Google Play to pilot third-party billing option, starting with Spotify. Ahead of this change, Google had already reduced commissions from 30% to 15% for the first $1 million of revenue developers earn using Play billing system each year, following a similar move by Apple. The company said that due to this pricing model shift, 99% of developers qualify for a service fee of 15% or less on its app store.
Damien Geradin, The Platform Law Blog: Spotify and Google Announce User Choice Billing: A preliminary assessment. These announcements put further pressure on Apple to alter its payment policy to authorize app developers to use the in-app payment system of their choice, as well as communicate with their users through the app. Despite being subject to multiple investigations, Apple has refused to make any concession. It a rather unprecedented move, Apple has also so far refused to comply with the order of the Dutch Competition Authority, whereby it has to allow dating app developers on the Dutch Store Front to use the in-app payment system of their choice and/or to provide links to off-app payment solutions. In this respect, the Google agreement with Spotify destroys Apple’s justifications for not allowing app developers to use the in-app payment solution of their choice as this would allegedly create security issues and would also prevent Apple from collecting its commission.
Daisuke Wakabayashi, New York Times: Google, facing antitrust scrutiny, says it will let apps like Spotify offer alternate billing systems. The move would allow those apps to bypass Google’s own payment system and the main commissions that it charges. The change comes as Google and Apple, the two biggest app store operators, face complaints from regulators and developers that they are abusing their dominance in mobile software to force companies to use their proprietary billing methods.
Ren Brody, Protocol: Your move, Apple. Apple is the elephant in the room. Google’s move certainly puts pressure on Cupertino. So long as Google and Apple basically held to the same fees in the same form, the commissions were basically a fact of life that developers and consumers had to accept. (Plenty of people would call that a duopoly.) Now that Google and Apple are splitting in their approach, everything is up for grabs, and the forces of antagonism led by Spotify, Epic, Match and others may be scrambling.
Kif Leswing, CNBC: Google will allow Spotify to offer its own billing on Android. Google and Spotify said on Wednesday that a future version of the Spotify app will allow users to sign up inside the app to pay Spotify directly for a subscription. The move is the most significant concession so far from a major mobile app store to allow third-party billing systems inside apps. The move also puts pressure on Apple, which is firmly against third-party billing on its iPhone App Store.
Meghan Bobrowsky and Tim Higgins. Wall Street Journal. Google to Allow Alternative In-App Payments for Spotify Users, a New Step in App Battle. In the Netherlands, Apple is fighting with the regulator there which has ordered alternative payment methods to be implemented in dating apps. Apple responded while still charging apps a fee, 27% of revenue instead of 30%. The changes haven’t satisfied the Dutch authorities, who are fining Apple more than $5 million a week… Late last year, Apple said it would allow media apps, such as Spotify, to create in-app links to sign-up pages outside of the app to end an investigation by Japan’s antitrust regulators.
Poppycock! Quite the contrary from my perspective. Consumers now have “more choice.” If consumers desire the new available choice, then they can leave the iOS platform and convert over to the Google Play App Store on another OS. Google’s App Store runs on Android. That is a much larger platform offered through many more providers.
I’m more concerned about sideloading and opening up the platform to nefarious apps.
Let alt payment platforms exist, charge a fee from them but keep the platform secure.
Duh.
As long as pricing is the same whether using Apple’s payment method or the alternative method of payment I see very little motivation for anyone to use the alternative method of payment. Even for those that opt to use the alternative method of payment, there is still a chance that they will use the Apple Card.
The internet is still the Wild West- as a consumer I benefit and appreciate the sanity and safety that Apple brings to their ecosystem by putting in place many of these controls that seem to be under constant attack.
In the off-chance that app developers are able to offer discounted pricing for using their payment method a simple solution would be for Apple to charge app developers a fee directly, perhaps based upon downloads or active installs etc..
I believe we are still a long way (if ever) from Apple taking a discernible hit to app store revenue.
CG
I understand the App Store business model but it does have more holes than Swiss cheese.