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Google allows alternative in-app payments for Spotify users, another step in app battle

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Spotify Technology SA has struck a deal with Google to offer an alternative payment method within its app for users, the latest sign of app stores’ weakening grip on third-party software.

Music streaming service and search giant Alphabet Inc. announced the deal on Wednesday, allowing the Google Play Store’s Spotify app to offer a choice between its alternative payment method and Google’s, which represents up to 30% of income.

To avoid these fees, Spotify did not allow users to sign up for paid services through Google’s app and users had to go to the music company’s website.

A Spotify spokeswoman declined to comment on how Google’s revenue will be cut from the alternative payment method. The alternative billing option is expected to be available later this year, Spotify said.

“It’s safe to say that we have negotiated trading terms that meet our standards of fairness,” the spokeswoman said. Daniel Ek, chief executive of Spotify, on Twitter touted the arrangement as setting “the groundwork for what the next generation of the platform should look like”. “

Google has also not addressed its revenue reduction under the new deal. In a blog post, Google said Spotify would be the first of a small number of developers allowed to participate in a pilot program enabling alternative billing options.

“This is an important milestone and the first on any major app store, whether on mobile, desktop or game consoles,” wrote Sameer Samat, vice president of management. Google products. “This pilot project will help us increase our understanding of whether and how User Choice Billing works for users in different countries and for developers of different sizes and categories.”

The ability to offer alternative payment options within the app has been at the heart of a fight that Spotify, Epic Games Inc. and other developers have waged against Google and Apple Inc. for years.

Third-party apps have argued that blocking alternative payment methods is unfair, depriving users of choice, while platforms have countered that their systems provide secure user payments and collect fair fees for the technology offered.

The disagreement caught the attention of regulators and lawmakers around the world. Congress is debating legislation targeting app stores while the European Union is expected to finalize a new law that would force alternative payments.

Last year, South Korea enacted a similar law. Google has previously said it will allow alternative payment systems, but will still collect a share of app-generated revenue, rising from 30% to 26% if an alternative system is used.

In the Netherlands, Apple is fighting with the regulator who ordered the implementation of alternative payment methods in dating apps. Apple responded while charging app fees 27% of revenue instead of 30%. The changes have not satisfied Dutch authorities, who are fining Apple more than $5 million a week.

“Fortnite” video game maker Epic Games has filed antitrust lawsuits against Apple and Google over their app stores. Apple mostly won its lawsuit last year, although both sides are appealing the verdict. Apple is unhappy that a federal judge ordered that it cannot block developers from sending users outside the App Store to make app-related payments.

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 a investigation by Japanese antitrust regulators.

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