Google slaps new developer fees to comply with EU’s Digital Markets Act

Google is beefing up defences with new app developer fees as it stares at the European Union’s Digital Markets Act (DMA) that seeks to bring about a competitive app store ecosystem.

On Wednesday, Google came up with what it calls an External Offers programme, which allows Play Store developers to promote their app among users outside the app. Google claims this as part of its regulatory compliance. 

Google, however, will be charging two fees for transactions under the External Offers programme – an upfront acquisition fee of 10 per cent for in-app purchases or 5 per cent for subscriptions for two years and an ongoing services fee, which is 17 per cent for in-app purchases or 7 per cent for subscriptions.

The service fee, as Google puts it, is not simply a processing charge – it reflects the value of the services provided by Play Store and Android.

According to Google, it is already in compliance with the DMA as it allows sideloading of apps.

Apple too has used a similar tactics. It reduced the App Store commissions in the EU to comply with the DMA only to introduce a new Core Technology Fee for developers, which is €0.50 per year for each app per million distribution outside the App Store. 

The Digital Markets Act (DMA, Regulation (EU) 2022/1925) came into force on 1 November 2022, with its publication in the EU Official Journal. 

The Digital Markets Act aims at preventing digital platforms acting as “gatekeepers” in digital markets from imposing unfair conditions on end users and at ensuring openness.

These online platforms serve as an important gateway for businesses to reach out to customers and will have a significant impact on the market because of their entrenched position.

The assignment of “gatekeeper” status depends on the size or market capitalisation of the entity within the European Economic Area (EEA).