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Comment by forgotmyoldacc | Hacker News Reader

Am I reading this correctly?

> We recognize, however, that developers will incur costs to support their billing system, so when a user selects alternative billing, we will reduce the developer’s service fee by 4%. For example, for the vast majority of developers who pay 15% for transactions through Google Play's billing system, their service fee for transactions through the alternate billing system would be 11%.

You have to pay a 11% fee for using someone else's billing system when buying an in-app purchase, if that app was downloaded from the Play store?

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Everyone keeps repeating this assumed idea that it's "just" a payment processing fee which is simply not true and never has been.

The fee is for: - access to install base and customer relationship - funds development of the platform, SDK, and tools - funds development of the store - funds operation of the store - profit for the company - last and least: payment processing

Could those things be funded differently? Yes... but it would require a radical restructuring of the way mobile platforms work that would not be favorable to startups or independents. It would also lead to massive fracturing of the customer relationship, lower trust, and ultimately shrink the total dollars spent on software (though the big players would make more money). People trust Apple or Google with their credit card. They know the platform requires all subscriptions show up in one place and they don't need to call and argue with a sales rep to cancel. Be prepared for all of that to disappear when it becomes a free-for-all. Stop pretending this kind of "freedom" is completely free of consequences even for those who don't take advantage of that "freedom".

The article actually enumerates what else the fee is used for. In Google’s words its:

""" Android & the Google Play Store: The free Android operating system enables hardware manufacturers to build a wide range of devices at different price points that gives users unprecedented choice. And the Google Play Store delivers the world's largest selection of apps and games, available in over 190 countries with personalized recommendations and easy discovery of high-quality apps.

New Android platforms: We build platforms for new form factors such as Auto and TV to help developers increase their reach in new ways.

Security: Consumers trust Android and Google Play because of its security, the reviews of apps to ensure they comply with policies around safety and privacy, and with automated security of Google Play Protect that scans over 100 billion apps per day.

App distribution: Developers can instantly reach over three billion Android users with the ability to optimize delivery by device and functionality and provide ongoing updates.

Developer tools: Developers can run experiments, beta test, optimize store listings, analyze performance, and more. """

> access to install base and customer relationship

This is the rent seeking that everybody is objecting to.

> funds development of the platform, SDK, and tools

The platform is open source. So if you want to use someone else's tools then you shouldn't have to pay this part, right?

> funds development of the store - funds operation of the store

The cost of providing this is negligible. Many alternative stores and repositories do it for free. It accounts for zero percent of the cost of anything.

> profit for the company

Profit isn't a separate thing. The cost of payment processing already includes the profit of the payment processor etc.

> last and least: payment processing

Which is the only thing left, so if you're using someone else as payment processor...

It's the "access to install base and customer relationship" that they're really sticking it to you for, and that's the illegitimate one.

> The platform is open source.

Android is Open Source, Google Play & Google Play Services are not. Developers are free to build Android apps that don't use anything related to Google Play.

And, as far as I can tell, Google is the one making most features and patches to AOSP. Just because it's OSS doesn't mean it is operating independently, running only on donations.

(I work at Google, but not at all on Android)

> The platform is open source. So if you want to use someone else's tools then you shouldn't have to pay this part, right?

The platform here includes "android", so yes if you aren't using Android you probably don't need to pay to support Android development. It's not clear here, but do you think "open source" somehow means "doesn't require funding to develop"?

> The cost of providing this is negligible. Many alternative stores and repositories do it for free.

Few/none of those provide app review and various anti-malware stuff. You can argue that these have negative value, but they absolutely have non-negligible costs.

Also I don't think any alternative stores support canarying/progressive rollouts of new versions, which is useful for developers and a nontrivial to support for other stores.

Android is supported by others as well - it is not effort of Google only...

Yes, it is true, that there are other stores - like Samsung has it's own store on Android, so technically there is a choice of stores. Apparently Google would not fight store wars with the producers of hardware... but there is nothing that prevents them to disable any other stores by any other means - by simply sabotaging their app.

The issue here with Google Play is that it assumes, that Google Play has monopoly of money transactions for that publisher outside of Play store, even if the app has a choice to receive money through oher means - crypto, Paypal or cards. Same issue is with Apple store - they did not wanted to allow to transact money in Epic store(and wanted their cut on those), where you could make transactions in the Epic website from your card.

>Also I don't think any alternative stores support canarying/progressive rollouts of new versions, which is useful for developers and a nontrivial to support for other stores.

You have a career in comedy if you think that the Play Store's definition of canary rollouts is good. Hell, the entire Play Console is probably one of the most hated piece of software by android devs because of how terrible it is, with constant changes, horrible performance, stupid requirements and non-working options.

Each time someone use the straw man argument that they have costs to cover and that they still need to do a profit, just go back looking at facts:

<<Google Play Had a Profit of $8.5 Billion in 2019 With Margins of 62 Percent. According to court filings unsealed>>

https://www.thurrott.com/mobile/android/254978/google-play-h...

So, no, with indecent margins like that, you can't justify them using their monopoly to racket app developers with fees that are unrelated to the usage of the service.

Imagine if everyone was doing the same in real life, that would look absurd:

- your power utility provider requiring that you pay to them 10% of your business income because you use electricity somehow and they have costs and need to do profit

- the postal service requiring you to pay 15% of the bills you send by email through their online service or 10% of the bills you send by any other provider just because you benefit from receiving standard letters in your home mailbox. Just because they have costs and they need to do fat profits.

- Ikea forcing you to give them 11% on your business incomes because you use a desk and a chair that you bought there in your office. For the same reasons...

No, no, you're wrong! The free market will solve this!

You know that high margins are someone else's opportunity? Surely someone else will build an alternative that undercuts Android.

Ah, you say there's a huge moat? Worth billions if not trillions of dollars? Huge market recognition? Agreements with huge companies? Regulations and government approvals all over the world? Years and years of development by thousands of developers?

On top of that there's an oligopoly in place by companies already convicted of such agreements for other issues (see the anti-poaching agreement from a decade back)? What? Like a cartel that probably fixes prices?

> - Ikea forcing you to give them 11% on your business incomes because you use a desk and a chair that you bought there in your office. For the same reasons...

They very well can make these stipulations and expect you to pay them. They have every right to go "uh we need 100% of your business profit if you want to buy IKEA furniture". You have every right not to do that due to the unreasonable payment terms. You'll need to ask your lawmakers to fix this if you think it's unjust and you're being forced against your will to oblige.

Still, Google's costs of running Play Store are proportional to number of installs and maybe number of updates, not to amount of money users spend.

Google could charge accordingly without any "radical restructuring".

I don't see anyone sticking with android if they had to pay $1/mo, though.

>>> Everyone keeps repeating this assumed idea that it's "just" a payment processing fee which is simply not true and never has been.

When you are buying a phone, you also pay price that includes price for OS of the phone, that includes development costs of SDK and development tools. Some of the phones nowadays has a choice to BUY and install different OS, that comes with different stores.

Unlike your assumption, payment processing is completelly different ecosystem and Apple is simply using monopoly on iPhones and not letting other stores on their hardware and software. Alphabet does not produce phones... so IMO it is acting worse, that it makes up these stupid tales. This is one of the reasons why I am switching my phone from Android, because that is MY phone, that I paid for! Besides, Android still snoops your data without your consent and I'm not even paid for that data!

Besides, the only concern about payment processing that YOU should have is not development costs(they can't be that HUGE...), but if your payment processing is safe and protected!!! That is the only costs, that stores should have - to ensure protection of those many many transactions, where maintenance and development costs are miniscule and to be even considered is laughable topic.

When you are buying a phone, you also pay price that includes price for OS of the phone, that includes development costs of SDK and development tools.

With the race to the bottom on cheap Android phones, it's obvious that "profit from the device only" is insanely low.

> Some of the phones nowadays has a choice to BUY and install different OS, that comes with different stores.

Just pointing out that this seemingly directly contradicts your line before it. If some phones can install a different OS and come with a different store, why should the phone profit margin go towards developing the SDK and development tools?

It's actually worse, it's 26% for the larger businesses subject to the 30% rate which make up 99% of Google's revenue, when using their own billing system. It's a farce and Google knows it. (Similarly bull----, Apple claims their existing practices already comply with South Korea's new laws... which they definitely do not.)

The penalty for noncompliance is so low because the money is so huge, and nobody will go to jail, that they are going to pull every stunt in the book until someone has the guts to start shutting these companies down. By claiming they are complying technically, while obviously not, they force the government to follow up the legislation with a regulatory action, which then they can tie up in the courts for years.

If they complied with the law properly now, other countries would quickly follow suit. But if they can tie up the attempt for a number of years, they can all pad out their retirement funds before all the litigation is over and duck out before the stocks crash.

OK, let's imagine South Korea "shuts Google and Apple down" (kicks them out of the country, I guess, and then bans anybody from importing their products). Now what? Seems like they just don't have smart phones and torched a pretty productive part of their economy (i.e., producing Android phones), and it's not clear where independent app developers are supposed to be developing their stuff anymore.

Or this could force phone companies to create alternative, more open forks of the supposedly Open Source Android.

It's not like we don't know how to do this stuff, we just don't invest enough in it.

South Korean company tried to do just that - they built an OS called "Tizen" which withered and died because without user-facing software, it was a horrible user experience and people were seriously annoyed that they couldn't use the software they actually care about. Instead, they went and bought Google/Apple devices instead.

Another USA company tried to do that as well. They called their OS "Windows Phone" and it withered and died because a fractured support for software people care about doesn't make a useful device.

A Chinese company tried to do that as well. They now again ship Google Services next to their own Huawei services in Europe because without software support, their smart devices weren't useful to users either.

You're almost there, but you didn't go all the way.

South Korea is a small market. The US company is famous for mismanaging its mobile operating systems for more than 2 decades.

The Chinese company didn't "try" to do that, it was forced to. But guess what, in China, where most external apps are banned, there's an entire, completely separate ecosystem.

You do need a combination of skill and critical mass. I don't expect South Korea to achieve this, but for example if there's a bigger alliance of say, South Korea, the EU, etc., where they put resources into encouraging an OS based on open standards, that starts to look feasible.

App developers will need support, but they can port their apps. Especially since this OS doesn't need to start from scratch, it can be based on AOSP.

That's probably the biggest thing Google/Apple are afraid of this point, that a fully open/interoperable mobile OS is somehow enforced. They either have to open up their OSes to be in key markets or they're forced to let someone else create that OS.

South Korea has its own Galapagos Island situation with apps thanks to efforts to foster them by the government — eg Google Maps is seriously crippled and you have to use Kakao Maps, they have their own local version of Uber, etc, etc

"without software support, their smart devices weren't useful to users either."

Therefore, logically, Apple should be the one paying app developers 30% of their revenue. Witout them iPhone would be an overpriced paperweight.

The relationship is symbiotic. iPhones need your apps to stay relevant, and developers need access to the iPhone ecosystem to be able to reach anybody.

Sure, but Apple has the power, and money follows power.

Apple pays developers 70% of their revenue. Thats where the developer revenue comes from.

Unless developers get money from iPhone sales, this statemet has tenuous relationship with reality

Where are you getting your information? Tizen OS is not dead. It is well alive and kicking and being improved and Samsung is slowly implementing that unified OS not only for their phones, but for other Samsung products. The main issue for any phone producer is that any OS that they do not own also Android comes at a price - there is no such thing as free OS.

There are also plenty of other mobile phone OS, that are not compatible with every phone and that is the main issue why they are not widespread. Phone that I own is supported not only by Android(and Android forks), but also couple of other mobile phone OS. The trend is that in future there will be more choices for OS, that might satisfy those users, that are currently not happy about Android, but have no other choices at the moment.

There are at least 10 other mobile OS choices - most of them are based on Linux, but current share of those is ~0,1% out of ~6 billion of phones. In total numbers that is only 6 million devices. 6 million device market is a significant number for any company, not to mention, that this number is only playground compared to 1000x larger world market of mobile phones.

If it were so easy Chinese companies would have already done it, having both more resources and an obvious incentive.

They have done it. Do you know how the Chinese smartphone app market works?

As far as I'm aware almost everything is still Android, even if they're not using the Play Store.

Yeah, but Android is Open Source by design.

All these governments don't have an issue with the code, they have issues with project governance.

But they haven't gotten their own fork off the ground so they're still dependent on Google for continued updates.

Yeah, but with enough of these "nudges", maybe it finally happens.

The EU has already fined Google, South Korea is adding these new rules, I think even the US is thinking about some regulation, let's see what happens in a few years.

Ultimately, my guess is that the military/China conflict angle prevails over antitrust when it comes to Google. But I could be wrong. Certainly China has cracked down on its side, which I didn't anticipate.

Samsung and Tizen OS(that comes with store) is already an alternative for South Korea. Though, so far Samsung has profited from cooperating with Android, as it gained unprecedented share for smartphone market.

iPhone has branded itself as status symbol that people are rich and can pay and maintain lifestyle that includes ipHone - Androids, well - it is replacable and will be eventually.

At the very least, if Samsung is compelled to exclusively make Tizen phones, I think they can pretty much kiss foreign sales good-bye. Though I guess they're in better shape than LG trying to license the OS from their chief competitor.

"Now what? Seems like they just don't have smart phones and torched a pretty productive part of their economy"

So you are saying Google / Apple are above the law, capitalism is more important than democracy?

Where does this end? They might as well start acting as mafia, resort to raketeering and break you legs if you don't show up for work.

No, I’m not saying that. I’m saying there is a reason we have a regulatory regime with all the safeguards you’re decrying instead of randomly axing companies.

You reasons seems to be that Apple and Google are holding us hostage.

Is there any other reason i missed?

Sure, in the same sense the power plant "holds us hostage" so we don't respond to malfeasance by not having electricity anymore.

I have not found an English translation of the South Korean regulations - do you know what clause(s) Apple does not comply with?

That's because the law was stupid and apparently everybody who cheered for it missed a business 101 class. Why do people expect google or apple to roll over and die when faced with half assed laws ? They way SK or any country can meaningfully change the balance is by attacking the source of the problem. Google prohibits vendors from bundling other stores, which is the first issue. Second, robust privacy laws should prohibit google from being privy to any transaction data between the user and a vendor. So google doesn't get to intercept what the payment amount should be. Third, even if alternative stores are allowed, they still won't be popular. So for that, the government can heavily tax play store etc. to level the playing field with alternate local stores.

>Google prohibits vendors from bundling other stores,

they do? then why does my phone have a uninstallable 'galaxy store' app that Samsung decide to fill my limited storage with.

This still is a walled garden. Store from os or manufacturer. If you try to install a third-party you may end up with poor user experience from the os.

Time to split app distribution from OS. Making it mandatory to allow other stores, with first class user experience, and not set their as default one.

I installed the amazon app store on my android phone and it worked fine same with installing FDroid. all i had to do was check a box when prompted.

Sure but it's only you, already knowing about alternative stores, and with your specific device.

That's because google and samsung need each other. So samsung gets a pass. They don't allow other manufacturers.

Huawei ships with their own app store on devices with Play Services as well. There's no restrictions for other manufacturers.

What other manufacturers can't do is fragment the ecosystem and prevent people from also using Play Store.

The epic lawsuit has quite a few details about google preventing manufacturers from installing epic software/epic store on devices.

Step four, Korea now has a totally balkanized app system different from the entire rest of the world, it's a headache to deal with, and it encourages dangerous user behavior. Well, I guess they've been down this road with SEED/ActiveX already.

I love how this makes them admit that an average payment processing fee is only 4% (Less in the US actually, not sure about SK)

This has been part of Apple's argument all along. The 30% was never for payment processing but for the overall "ecosystem".

> The 30% was never for payment processing but for the overall "ecosystem".

Yup, ecosystem: https://en.wikipedia.org/wiki/Braeburn_Capital

For those that don't understand what that is, Apple's products, especially the App Store, have insane profit margins. Apple's profits are so high that they don't know what to do with the money so they started their own investment fund.

> In October 2012, CNET reported that Braeburn had US$117.2 billion under management, making it "the world's biggest hedge fund."

That was in 2012. Since then they've almost tripled the amount of Apple money that they manage.

Minor nitpick. Wikipedia, CNET and Zero Hedge are wrong about Braeburn Capital being the largest hedge fund. A hedge fund employs "alternative" investment strategies to traditional investment funds. If we loosen the definition to include Braeburn Capital, then it would also cover BlackRock, which has almost $10 trillion in AUM.

Well, I'd say that your comment probably provides the biggest bang for the buck, educationally, if you edit the Wikipedia page :-)

> Apple's profits are so high that they don't know what to do with the money so they started their own investment fund.

So we should expect companies to only profit to a point of net-zero? Or can you call out a percentage of revenue that is acceptable?

It's not about profits per se, it's about market distortion.

Just as people who are too rich distort democracy.

Right, the fee isn't the using Google's payment system, the fee is for using Play Store. Or rather, 11% of it the 15% is.

If that is the case then why is the fee taken as a percentage of payments made within the app as opposed to number of downloads, or just a straight up monthly or annual fee?

I don't see how any developer nor consumer would benefit from "pay your monthly play store fee to access the store". Imagine if credit cards also worked this way.

From a conceptual level, it makes sense to monetize a platform based only on the people making money. Like how game engines are generally free to use for games that make little or not money.

On the more practical side, it's kinda hard to make yours work. You probably don't want to charge a popular free app like Wikipedia the same as an app like Netflix.

This year the EU overhauled VAT regulations for purchases from outside the EU.

First of all it is now possible to make tax declarations yourself without going through a customs agent. Previously if you bought something like a dashcam from AliExpress you'd need to pay VAT and a "processing fee" to the agent (i.e. the post office) which in total would come to around the same price as you paid the seller. It's still somewhat complicated to do yourself, but the post office here introduced their own electronic declaration system. If you choose to use their system it's €3, but if you choose to do it yourself you need to pay a "parcel handling fee" of €3.

Additionally the regulations require sellers sending goods to the EU to charge VAT at the time of purchase. So everything you buy from AliExpress now is sold with VAT (but prices are still shown without). The post office also introduced a €1 handling fee for these parcels - that they don't need to do anything with other than deliver them.

"Sure, you can use an alternate billing system. But here's all the reasons we're great. Oh, your billing system wants more than 4% just like we did/do? Well shoot... Guess you're stuck with us, huh?"

What billing systems want more than 4%? Credit card transactions usually cost less than 2%.

Microtransactions are typically higher.

https://www.paypal.com/us/webapps/mpp/merchant-fees#statemen...

In the US, PayPal is a 4.99% + fixed (US: $0.09).

"Less than 2%" plus an additional constant-ish fee, sure. The typical cost of a CC transaction is significantly more than 2% at small amounts (like many in-app purchases).

What’s the credit card processing fee in Korea? I believe it’s generally around 3% worldwide.

In the EU it's capped at 0.3%.

That's only a part of the fee, in the end it's about 1%

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