The step taken by Epic Games with its popular Fortnite against the giants of Apple and Google is reissued again. Now, it is Tinder’s turn, which, fed up with the ways in which income is distributed among digital companies, has initiated legal action against Alphabet for feeling “hostage” to its billing rules in the Play Store.
The argument put forward by both companies, whose first records must be found in 2019 by Spotify, is due to the abusive practices involved in being part of the download stores of these companies.
The conflict starring the company that owns one of the most famous games in the world, back in August 2020, in the midst of a deep pandemic, ended with Fornite being “kicked” first from the App Store and then from the Play Store, for having included a payment system outside of the one imposed by Apple and Google themselves in their stores. That argument based on the “abuse” of the commercial policies of these two giants over the application developers is the same one that is reissued, now, by Match Group, the owner of the dating applications Tinder and Ok Cupid, which refuses to use the Play Store payment system.
Do dating tremble in these stores? In principle, not because, unlike Fortnite, these apps are still present in the Android store, but there is no guarantee that this will not happen in the future. Everything will depend on the voltage to which this moment of tension rises. In its lawsuit, Match accuses Alphabet, the parent company of Google, of exercising monopolistic practices due to the billing rules of its application store and thus violating federal and state laws in the United States. The complaint, in short, happens because Match does not want to use the Android billing system, it wants another, alternative, as Epic Games decided at the time to sell credits, coins, dances, costumes and other virtual objectives, and that generated the dismissal of those stores.
The thing is not only because of the monopoly of the Android payment system. It is also due to the commission it charges, which reaches 30 percent, a value that Match also considered abusive and that, according to its rationale, is due to the dominant position of both players in their own operating environments.
Match was one of the first that, at the end of 2020, joined together with Epic Games, Spotify, Microsoft, Rakuten and other companies against Apple in the so-called Coalition for App Fairness (CAF or Coalition for Application Equity) through which they seek fairer deals for their apps in the stores of the digital giants. In fact, they created a decalogue on the good practices that digital stores should implement in relation to the ecosystem of application developers.
Apple has been a little – just a little – more open to this discussion, but nothing is settled yet. On the contrary, everything indicates that this will be another of the great discussions of the digital industry of the present and the coming years.
This conflict, now put on the agenda by the judicial measure of Match, is gaining strength these days because on June 1, Google will change the terms linked to purchases made within the apps that, from that moment, must be invoiced by the Play Store system.
“10 years ago, Match Group was Google’s partner. Now we are your hostage, ”said the company in the lawsuit that it filed in a California court and that was replicated by different means. He further added that “Google attracted app developers to its platform with the guarantee that we could offer users the ability to choose how to pay for the services they want, but once they monopolized the app distribution market for Android with Google Play, leveraging the services of popular app developers, tried to ban alternative in-app payment processing services so they could take a cut of almost every transaction on Android.”
Match’s request aims, then, to circumvent the Android payment system within its own application and resort to another, in addition to receiving compensation for economic damages, in addition to the legal costs that this move implies. That request is what neither Google nor Apple want under another argument, not less, linked to the prevention and protection against fraud.
In the Play Store there are between 2.6 million apps for download, according to AppBrain’s real-time report, which in April registered the entry of some 25,000 applications, an interesting number if one takes into account that in the last year this behavior has been decreasing. The largest number of apps that were uploaded to the Google store were considered “low quality”, that is, they did not generate interest to be used.
Bringing these figures may help to understand part of what is happening in stores and how each member of this digital ecosystem begins to pull in their favor when they realize that the growth curves experienced so far will no longer be repeated in the future. Not because the market is contracting, but because, as connectivity advances – which also costs more – and markets, especially the most developed ones, mature, so do businesses: generating new revenue requires additional efforts. For all members of the ecosystem.
Is this decision by Google – announced well in advance, of course – a strategy aimed at controlling 100 percent of what happens in each of the applications present in its store for “security reasons” or is it the way to have Certainty about the income that it will generate in the future, taking into account that the level has been lowering and the number of applications that are uploaded to it?
Google responded, of course, to this presentation and assured that the intention of Match is “to avoid paying the important value they receive from the mobile platforms on which they have built their business. Like any business, we charge for our services, and like any platform, we protect users from fraud.” (Almost almost the same argument that, with its differences, the telecommunications operators use when you ask companies like Google, Amazon and Meta, to also take charge of infrastructure deployments. But we will not dwell on this, now)
Although some developers have chosen to skip the Play Store – which, in a way, is enabled – and Google has lowered its commission prices and created special plans, things do not seem to work. More than 90 percent of payments for purchases made in these apps end up being executed by their own system that does not offer, for example, certain facilities that those same apps do provide. From Match they pointed out that Tinder users value their payment system because it enables the possibility of paying in installments or through a bank transfer, an alternative that Google does not allow.
There are hundreds of millions of dollars at stake, of course, can anyone doubt that? Those millions of dollars will mark a before and after on June 1 when Google’s policies change and the fate of Tinder in its mobile store is defined.
But it is not an issue that will remain in what happens in the next month. In September 2021, and in relation to Epic Games’ lawsuit against Apple, the United States justice ordered Apple to make the payment options for its App Store more flexible, recalls Cinco Días. But the owner of Fortnite could not prove at that time that there had been violations of antitrust rules. Will Match be able to prove it now? Will this new presentation broaden the discussion going forward?
It’s possible. What is concrete so far is that, in addition to the legal battle, the so-called Open Markets for Applications Law was voted in the United States, aimed at expanding competition in the app market and putting limits on the controls that are established both in App Store as in Play Store. Norm similar to those that have been approved in Europe. And if this text advances, the digital giants will not be able to require developers to use their payment systems yes or yes under the argument of privacy protection and security prevention, an issue on which, without a doubt, everything the digital ecosystem must concentrate efforts.
The discussion is open and raised. But there is more. A report from the National Bureau of Economic Research warns about the impact that regulations such as the General Data Protection Regulation (GDPR) would be having on the application innovation ecosystem. And, at this point, we return to the data mentioned above, on how the volume of applications in the Google store has been decreasing and the impact that this generates at the business level, beyond the commissions that it obtains for the good functioning of the most popular applications. But this part of the story will be dealt with in another chapter. The concrete thing is that Tinder also charges against Google, and not with hearts or crushes precisely.