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September 22, 2021
Charis Journal

Google is about to impose Play Store tax on 3% of payment non-compliant apps

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US tech giant Alphabet Inc’s Google has said that it is going to enforce Play Store tax on over 3 per cent of apps for not abiding by its payment system policy.

The company demanded that the apps selling digital items without complying follow the rules within a year.

Google’s rebuttal came on Monday in its bid to refute criticism that it selectively imposes 30 per cent mobile app store tax.

The development comes after lawsuits filed by “Fortnite” video game maker Epic Games last month accusing Google and Apple Inc of anti-competitive conduct.

Applications sold on the tech leaders’ stores are required to use their payment systems so that they can collect a portion of sales, which developers describe as a tax. The companies are defending the allegations.

App stores are a fast-growing business as sales of Google’s search ads and Apple’s iPhone flatten out.

Google said under 3% of developers with apps on its Play store sold digital goods over the last 12 months, and nearly 97% comply with its payment system policy.

Dating apps maker Match Group Inc. is among the companies that have publicly said they do not pay Google’s 30% fee, which decreases to 15% in subsequent years if it is for a subscription service.

Antitrust regulators in several countries are looking at the issue, including in South Korea, where several media apps anticipating Google’s stricter enforcement pre-emptively complained to government officials recently.

Apps have said 30% is excessive compared with the 2% fees of typical credit card payments processors, while Apple and Google say the amount covers the security and marketing benefits their app stores provide.

New apps must use Google’s payments tool for sales by January 20, while existing apps have time until September 30, 2021.

Apps that shifted to selling digital items from physical goods and services because of the coronavirus pandemic may get additional time to comply, Google said. Apple said last week that a similar temporary reprieve extends through December 31.

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