Google Says All App Developers Must Begin Forking Out 30% Play Store Cut Next Year

Alphabet Inc GOOGL GOOG subsidiary Google wants developers who offer in-app purchases on its Play Store to exclusively use its in-house payment system that gives it a 30% cut.

What Happened: The Sundar Pichai-led tech giant said in a blog post that developers are expected to “pay a service fee from a percentage of the purchase.”

The vast majority of developers already utilize the Google Play billing system, as per the company.

“Less than 3% of developers with apps on Play sold digital goods over the last 12 months, and of this 3%, the vast majority (nearly 97%) already use Google Play's billing,” the company said.

The tech behemoth is giving developers until Sept. 30, 2021, to make the necessary updates and comply with its billing policies.

Why It Matters: Google takes a 30% cut from payments made within apps on the Google Play store, the New York Times reported.

Netflix Inc NFLX and Spotify Technologies Inc SPOT have reportedly skirted the Mountain View, California-based company’s billing system by allowing users to pay them directly using a credit card.

Rival Apple Inc AAPL is also facing flak for similar policies as it too charges a 30% cut for in-app payments.

Companies like Match Group Inc MTCH, Tencent Holdings Limited-owned Epic Games, and Spotify have joined the Coalition For App Fairness in a bid to get the Cupertino-based tech giant to change its policies.

Epic Games is also engaged in litigation against both Apple and Google after its popular game “Fortnite” was removed from their respective app marketplaces.

Price Action: Alphabet Class A shares closed nearly 1.4% higher at $1,458.66 on Monday and rose almost 0.4% in the after-hours session. On the same day, the company’s Class C shares closed 1.35% higher at $1,464.52 and gained nearly 0.4% in the after-hours session.