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Comment by bogwog | Hacker News Reader

> Arguably Google needs to do the same work as a traditional payment processor

Unarguably, they don't need to do that. They want to, because a monopoly on payment processing makes a lot of money.

If 4%/15%/30%/whatever is what Google needs to charge to run their payment processing business, that shows that they're extremely inefficient/incompetent, and the market would be more efficient if other companies were able to offer that service instead. Last I checked, Stripe charges 2.9%, which is even less than what Google charges Spotify in this unicorn deal.

EDIT: the same goes for "store infrastructure" or whatever. If Google offered publishers the option to run their own infrastructure for distributing apps/updates/whatever, everyone would take that deal rather than pay Google's nonsense fees.

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Even 2.9% (which is what card payment processors charge as well) is ludicrously high. They make a very, very healthy profit margin with that. One of my greatest disappointments about cryptocurrencies is that they didn't destroy that ridiculousness.

The money largely funds consumer protection products such as when chargebacks have to be executed on fraudulent or other disputed transactions on your card. Zero liability guarantees that the card network infrastructure offers consumers come at a cost which is found here. Think of it as an insurance policy paid on every transaction which explains why it has to be a %.

Crypto offers no protections so no fees need to be taken.

Characterizing app store fees as purely for payment processing is so disingenuous it's hard to even engage.

The reality is these fees are for access to an audience. Google spends a lot of money developing Android and creating a storefront that huge numbers of people see every day.

Casting that as "payment processing fees" is like complaining it's outrageous for a farmer's market to charge $200/day for a 10x10 booth because 100sf of parking lot can be had for $10/day somewhere else: you have to willfully misunderstand the business for the argument to make any sense.

I'm not GP, but that's a really good point and one to keep in mind.

I suppose the question is, did the farmers market threaten all the other land owners if they allowed a competing farmers market to open up? Or throw metaphorical wrenches in the way to a competitor?

Google's exclusivity agreement makes it much harder for alternatives to emerge. Even with this though, I get that they are funding open source development and need to protect it somehow lest it be stolen (cough by Amazon cough) and made a competing platform. I'm quite unsure where the balance should be.

Your analogy is poor.

App store monopolies aren't built on threats. A mall giving an anchor retailer a sweetheart deal isn't threatening nearby malls.

They are, however, built on economies of scale.

They're built on excluding competition.

App stores, like payment processors, have economies of scale in the sense that you need a critical mass of users to sign up for them and trust them with their payment info, so you're not going to have a thousand of them, but you could certainly have a dozen. At which point they would have to compete on things like fees and keep each other in check.

But not if each platform has only a single dominant payment processor.

I don't agree the analogy is poor.

Unless I'm mistaken, Google has made threats, such as "if you include a competing app store, then you don't get any of the google apps, google play services, etc, and you can't use the Android trademark.

We saw in the early 00s a proliferation of "Android" devices that didn't have the Play store, and they were mostly DOA

An unwillingness to co-operate is not generally considered a threat.

> and they were mostly DOA

Maybe those stores should have invested a few dozen billion dollars in building up a comprehensive first-party app ecosystem that made them attractive to users.

Economies of scale, and all. Nobody's going to your farmer's market, because everyone's going to the mall that has a Walmart.

I wasn't trying to say that those fees are only for payment processing.

Anyways, to your point about audience: That's BS. The reason Google Play is the dominant store definitely has a lot to do with that, because nobody is going to publish on "My Awesome Android Store" if it doesn't have users. However, the reason they have that audience is because of their anticompetitive tactics. It's all a cycle that feeds into itself, and it's how they're able to become the only game in town and charge literally whatever they want.

Epic has the ability and resources to potentially build a store with enough of an audience to attract more developers and compete with Google Play, but it won't happen as long as Google is allowed to continue acting anti-competitively.

> The reality is these fees are for access to an audience.

This is called a monopoly rent and is the sort of thing antitrust law is intended to prevent, when it's working properly.

> Google spends a lot of money developing Android and creating a storefront that huge numbers of people see every day.

Google gives Android away for free. They choose to do that, and if they didn't then it would lose to a competitor that did, because operating systems are a classic example of somewhere that free software works in the absence of anti-competitive behavior. If Google didn't develop Android then Samsung and Amazon and Canonical and Mozilla would do it, and parts of it would be more like Debian, which would be better.

> Casting that as "payment processing fees" is like complaining it's outrageous for a farmer's market to charge $200/day for a 10x10 booth because 100sf of parking lot can be had for $10/day somewhere else: you have to willfully misunderstand the business for the argument to make any sense.

Does the farmer's market also take actions to interfere with you being able to build your own storefront?

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