Google to force apps to pay 30% Play Store tax; gives one year to comply

Google on Tuesday said all apps that sell digital goods within Play Store have to use its billing system, which allows the tech giant to collect a percentage of in-app purchases as a fee. The firm said it was only providing clarity on its billing policy as there was some confusion.

Google's clarification comes as the firm faces accusations of having anti-competitive policies worldwide, most recently by Fortnite-maker Epic Games, which has sued the firm after being banned from the Play Store. Closer home, Paytm last week slammed the tech giant’s policies after its app, too, was delisted from the app store.

“We want to be sure our policies are clear and up to date so they can be applied consistently and fairly to all developers,” said Sameer Samat, vice-president for product management at Google, in a blog post.

Policy not new

The tech giant clarified that this policy is not new and Google Play billing has always taken a 30 per cent commission on these transactions. This will only apply to less than 3 per cent of developers with apps on Play Store, as 97 per cent are already using Google Play billing.

Non-compliant apps that may require technical work to integrate the billing system have been given a year (until September 30, 2021) to complete any needed updates.

Play’s billing system is not required for apps that sell physical goods, for example, ride-hailing services, or apps that don’t require any transactions.

For new apps submitted to the Play Store, this policy comes into effect from January 20, 2021, and includes categories such as fitness, game, dating, education, music, video, and other content subscription services.

Google said its Play Store continues to help Indian developers scale and reach wider audiences.

Consumer spending on apps and games created by Indian developers doubled year to date, compared to the corresponding period last year. Indian developers also saw growth of more than 80 per cent in consumer spending from users outside of India, compared to the corresponding period last year.

Row with Paytm

Noida-based Paytm last week accused the firm of making policies that are over and above the laws of the country after its app was briefly delisted from the Play Store for violating Google’s policy on sports-betting activities.

Asked about the issue, Purnima Kochikar, director, Google Play, said the incident shows “we need to continue to have this dialogue, clarify and apply our policy uniformly and equitably”.

Kochikar said the company has an active conversation with all the developers and the firm is trying its best not to disrupt the user experience. “We have had multiple conversations (with Paytm) and we will continue to do that, because at the end of the day, Paytm is an important partner,” said Kochikar. “We know a lot of our users use Paytm and we will continue the conversation.”

Paytm had launched a UPI cashback and scratch cards campaign on September 11. Its payments app was delisted on September 18 from Play Store.

Paytm had said Google, too, regularly runs similar scratch card campaigns in India. However, Google had said offering cashback and vouchers alone do not constitute a violation of its gambling policies.