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Google to Collect 30% Cut on In-App Purchases Starting in 2021

Google already required developers to use its billing system for in-app purchases, but will begin enforcing the rule more strictly starting next year.
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Taking a page out of Apple's  (AAPL) - Get Free Report book, Google will begin more strictly enforcing rules that require developers to use Google's  (GOOGL) - Get Free Report payment system for in-app purchases. 

Google announced the change on its Android developer blog on Monday, describing it as a clarification of Google's existing rules on in-app purchases. Google had an existing policy requiring developers to use Google's billing system, but the policy had been loosely enforced. 

"We’ve always required developers who distribute their apps on Play to use Google Play’s billing system if they offer in-app purchases of digital goods, and pay a service fee from a percentage of the purchase," wrote Sameer Samat, VP of product management at Android. "We only collect a service fee if the developer charges users to download their app or they sell in-app digital items, and we think that is fair. Not only does this approach allow us to continuously reinvest in the platform, this business model aligns our success directly with the success of developers." 

The changes are applicable to less than 3% of developers, Samat wrote, and developers will have until September 2021 to complete any needed updates to integrate their apps with Google's billing. 

Like Apple, Google takes a 30% cut of payments made through its Google Play store. And the platform fees have been the subject to growing scrutiny alongside antitrust investigations of Apple, Google and other Internet firms.

Last week, Apple said that it will temporarily waive its 30% commission on Facebook paid events, a feature Facebook introduced in August allowing small businesses -- hard hit by Covid-19 shutdowns -- to set up paid virtual events, amid an ongoing spat between the two tech giants. 

Apple is also locked in a legal battle with Epic Games, maker of the phenom game Fortnite, over Apple's 30% cut of in-game purchases through the App Store. 

Epic says that Apple’s commission is excessive, that Apple's policy of requiring developers to use its billing system, instead of their own, is tantamount to anti-competitive activity. 

Apple shares are up 53% year to date while Google parent Alphabet's are up 7%. 

Apple and Alphabet are holdings in Jim Cramer's Action Alerts PLUS member club