The decision by Alphabet unit Google to allow alternative payment systems on its Google Play store will put pressure on Apple to enact a similar change to its App Store, Wall Street analysts say. So far, the development has had little impact on Apple stock.
Google announced the move late Wednesday, saying it wanted to give consumers a choice for in-app payments. It recently launched an alternative billing system in South Korea in response to a new law there. Now it is exploring "user choice billing" in other select countries, said Sameer Samat, Google vice president of product management for Android and Google Play, in a blog post.
Google has begun a pilot program that will allow a small number of participating developers to offer an additional billing option next to Google Play's billing system. Google selected streaming music leader Spotify as its first developer partner in the program.
Users who've downloaded Spotify from the Google Play Store will be presented with a choice to pay with either Spotify's payment system or with Google Play Billing. Spotify will roll out the payment option in the coming months, the company said in a news release. Spotify has been a harsh critic of Apple's App Store policies.
Apple Stock Nears Buy Point
"This pilot puts even more pressure on Apple to open up their App Store to alternative payment systems," Deutsche Bank analyst Benjamin Black said in a note to clients.
Apple's most likely move will be to remove the so-called anti-steering provisions in its App Store. Those provisions prevent app developers from communicating other payment methods to app users.
On the stock market today, Apple stock rose 2.3% to close at 174.07. Apple stock is approaching a buy point of 176.75 out of a double-bottom base, according to IBD MarketSmith charts.
Meanwhile, Alphabet stock advanced 2.4% to 2,831.44. Spotify stock rose 0.5% to 149.26.
Apple App Store Under Siege
If Apple were to allow third-party payment methods for apps, many consumers might just stick with Apple's payment system, Evercore ISI analyst Amit Daryanani said in a note to clients.
"The App Store remains under siege, but we will likely see a protracted legal battle before Apple is forced to make any material changes," Daryanani said.
The App Store is facing legal challenges in the U.S., Europe and Asia. Another area of contention is the 30% commission fee Apple charges on most sales through its App Store.
Daryanani rates Apple stock as outperform with a price target of 210.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
