Today's print edition of the Korea Times contains an interview with me about Google's in-app payment rules. South Korea has become a key jurisdiction in the fight over mobile app store rules, with the Korea Communications Commission now investigating whether Google and others are in breach of the country's Telecommunication Business Act as amended last year.
What Google is doing in South Korea is to technically allow the use of third-party payment services, but with clear strings attached: all revenues generated that way must be reported to Google, and Google then charges 4% less than it would if it performed the billing part itself (26% instead of 30% in most cases, and 11% in the commercially less relevant scenarios in which the reduced 15% commission would apply). Google made that announcement last year, and Apple followed this summer. The 4% difference is at a level with what a third-party billing system will charge developers, so neither developers nor consumers will save money in the end.
A week ago Google announced the extension of its "user choice" billing pilot program to the following countries: India, Australia, Indonesia, Japan, and the countries in the European Economic Area (EEA). The latter was unsurprising as Google already made an announcement in late July to that effect. Google said that it wanted to comply with the EU's Digital Markets Act, but that one won't actually force Google to do anything for more than a year to come. It actually looks like Google made the announcement because of preliminary investigations by the European Commission's Directorate-General for Competition (DG COMP).
India, Australia, Indonesia, and Japan are jurisdictions in which Google is facing complaints by app developers and/or market investigations by antitrust authorities. No app developer--unless bought up by Google--is going to withdraw a complaint, and no competition authority that respects itself will content itself with a policy change that is not going to be of the slightest commercial relevance. It's all just posturing with a view to the next steps.
If developers were actually going to embrace that "user choice billing" program (which, however, won't happen as long as the terms are as unattractive as they are), Google would now be fragmenting Android in the sense of giving technical options to some users (depending on where they are based), but not to others.
Normally, Google stresses that fragmentation is highly undesirable and adversely affects developers. Nowhere has Google stressed that argument more vocally and aggressively than in the European Commission's Google Android case. The EU General Court (the lower court of the EU's judiciary) will hand down its decision on Google's appeal of that decision on Wednesday (September 14).
In the third-party billing context, Google actually does want to hassle developers. With its vast resources, Google can manage country-by-country rules--but for many developers the additional development and testing effort is a significant factor. At this stage, with no opportunity for developers or consumers to actually save money, it doesn't matter yet. But Google knows that it may come under pressure in some jurisdictions to lower that commission.
It's highly likely now that Google's third-party billing rules will diverge in the years ahead. In some jurisdictions, Google may have to adjust its terms sooner--or to a greater extent--than in others.
Android fragmentation, courtesy of Google.
