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Tinder is the latest app to join the growing revolt against the fees charged by app stores, with the launch of a new payment process that bypasses the Google Play Store. Google used to take 30 percent cut.
If you’re successful enough to have your application on Google Apps, and you make your payments via Google Pay, you are pretty much aware that Google takes its percentage. However, Tinder, the dating service app, decided it’s enough and now wants to avoid that fee by setting its payments service as the default option.
Google takes high 30% cut of in-app purchases. If the app offers a subscription, that amount drops down to 15% after the first year. Apple is no different – it takes the same.
Some app developers feel the amount is too high especially if it’s known that Google and Apple develop competing services that don’t feel the pain of losing 30% of a sale such as Spotify, YouTube Music, and Apple Music. Just for a comparison, Apple gets all of the revenue from Apple Music subscriptions at $10 per month, for instance, but Spotify only gets $7 from in-app memberships.
Tinder parent company Match Group, decided to ignore that policy in their new update and have put the default payment option through their own payment processor. Users input their credit card directly into the app, instead using Google Pay. Hence, Google doesn’t get a cut of the purchase.
Match Group spokesperson Justine Sacco said:
“At Match Group, we constantly test new updates and features to offer convenience, control and choice to our users. We will always try to provide options that benefit their experience and offering payment options is one example of this.”
She explained that after inputting your credit card into Tinder’s system, the app defaults to that payment method for any in-app purchase in the future, allowing Tinder to bypass the cut indefinitely.
Macquarie analyst Ben Schachter called this “a huge difference”. He added that this is an incredibly high-margin business for Google bringing in billions of dollars. He said:
“Tinder is relatively small and it won’t have a massive impact, but the concern is if this grows and gets into gaming apps as it starts moving forward. We’re going to see a lot of other companies potentially trying to experiment with this.”
This has a lot of sense if it’s known that Epic Games Inc., maker of the wildly popular Fortnite video game franchise, already made similar steps. Android users now have to go directly to Epic’s site to download its games.
Apple, on the other hand, doesn’t let users download programs outside the App Store, but there are ways to get around paying. For example, last year, Netflix Inc. stopped allowing new users to pay for their subscriptions in the iPhone—after taking a similar step for Android users months earlier.
Google hasn’t answered if they plan to take any action against their policy violation. This will be interesting if we take into consideration that Tinder alone raked in $497 million of total revenue across Android and iOS in the first half of 2019. Even if you limit that to Google’s cut, that could still be tens of millions of dollars lost from one company.