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Summary:

In a move that could signal Google is taking a hard line on in-app payments similar to the way Apple has outlined new subscription rules, Google has pulled the popular Visual VoiceMail app from Android Market citing a violation of the developer payment rules.

Screen shot 2011-02-24 at 6.26.00 AM

UPDATED: In a move that could signal Google is taking a hard line on in-app payments similar to the way Apple has outlined new subscription rules, Google has pulled the popular Visual VoiceMail app from Android Market, citing a violation of the developer payment rules. The details of the violation aren’t completely clear, but the developer believes the app, which has had one million downloads on Android, was targeted for not processing in-app payments through Google Checkout.

Google notified developer PhoneFusion Tuesday night, saying it was pulling their free voicemail app after more than two years on the market for a violation of the Developer Content Policy. When Fort Lauderdale, Fla.-based PhoneFusion followed up, the Android Team said in an e-mail that the developer violated section 3.3 of the Android Market Developer Distribution Agreement, covering pricing and payments. In the section, it reads:

…If you want to collect fees after the free trial expires, you must collect all fees for the full version of the Product through the Payment Processor on the Market. In this Agreement, “free” means there are no charges or fees of any kind for use of the Product. All fees received by Developers for Products distributed via the Market must be processed by the Market’s Payment Processor.

Jonathan Hollander, EVP of PhoneFusion, said Google never made clear what the violation was, and the app has not undergone any major changes recently except a bug fix a couple of weeks ago. He believes Google is forcing them to use Google Checkout for in-app payments. It’s unclear when the language in section 3.3 began requiring payments through the “Payment Processor.” Visual VoiceMail is a free app, but it makes money using premium features like voicemail transcription, ad-free service and the ability to receive faxes through a dedicated number. PhoneFusion runs those extra purchases through its own website similar to how Amazon links to its own site for Kindle purchases. Hollander said the move by Google is reminiscent of Apple’s new stance on subscriptions, which forces developers and publishers to use Apple’s in-app purchase system and prohibits them from linking to websites for outside payments.

“It looks like they’re pulling an Apple but just for us,” said Hollander. “There was no warning that they’re going to enforce this, which make it worse than Apple. Even if you disagree with Apple, they gave until June to remove their apps. Here, there’s no choice.”

Now it’s unclear if in-app payments are the reason why the Visual VoiceMail app was pulled. I reached out to Google last night, and they said they are working on getting back to me. I will update when I hear more. But this could have big implications for Android developers if indeed Hollander is correct. It would signal that Google is interested in channeling all payments through its recently announced in-app payment system, closing off other options in the same way Apple is doing.

As I’ve written before on GigaOM Pro (subscription required) it’s a lucrative move for a platform maker to take a cut of every in-app purchase. Google announced in-app payments earlier this month, but said it would be implemented by the end of the first quarter. It’s unclear if the system is in place, but this enforcement could foreshadow how Google will operate with respect to Android developers who offer in-app payments. It may be a requirement of developers instead of just an option.

Curiously, it doesn’t appear that other apps with in-app purchase have been pulled in the same way as Visual VoiceMail. Hollander said the decision to remove the app, which Google affirmed in an e-mail last night, smacks of punishment aimed specifically at PhoneFusion. He said Google has not offered the company any way to remedy the problem other than uploading a new application. The Android Team said because of auditing purposes, it can’t reinstate apps that have been cited for violations. That forces the developer to rename the app and lose all ratings and comments that users have given the app.

“The bottom line is, they said it doesn’t matter what the situation is; the only thing we can do is upload again,” said Jonathan Hollander, EVP of PhoneFusion. “We lose 20,000 comments and all the 5-star ratings and the name Visual VoiceMail; we lose everything. This is absolutely vindictive, that’s insane.”

Hollander wonders if PhoneFusion is being singled out because it competes with Google’s Android voicemail system and with Google Voice. The company also sells Phone FusionOne, a white label service for companies running VoIP to be able to offer Google Voice-like features. Hollander said the company is about to announce some big partnerships for Phone FusionOne in the coming months. The developer has also recently complained of poor mobile ad fill rates around 70 percent over the last two months, far below the 99 percent rate the app used to see before AdMob was bought by Google. Hollander said those complaints, all routed through e-mail, have also fell largely on deaf ears.

Whatever the case, this has serious implications. It could be the first sign Google is going to be aggressive in the way it pushes developers on its in-app payments system. That would force developers to have to fork out more to Google and lose some of their margins. Hollander said he pays credit card companies about 3-4 percent to process payments, but will have to pay 10 percent of payments to Google for using Google Checkout.

But if it’s a problem tied to competition with PhoneFusion, that’s also troubling. Google has touted its openness, but some are increasingly questioning how open Google will be as it looks to compete more and more in mobile. Skyhook, for example, has filed a lawsuit against Google for allegedly forcing some manufacturers to stop using its location technology in favor of Google’s own solution. The PhoneFusion situation could mean other apps that duplicate Google’s current or future services could be affected if the company is more aggressive in taking on competitors.

Now, this could be all be a misunderstanding or PhoneFusion could have violated the developer rules in a more serious way than it imagined. But at the very least, it seems like shabby treatment for a longtime Android developer. PhoneFusion has helped attract users to the Android Market and was highlighted on the Android Market website at one point a couple of years ago. But for the developer to get no warning and not be able to fix their app and resubmit the original app seems extreme. Hollander said it’s also been very tough getting any word out of Google, though he admits other developers have that problem too.

Now as the platform owner, it’s not unexpected for Google to flex its muscles. Mobile is the company’s announced priority for this year and making more money from Android is certainly to be expected. But if PhoneFusion’s accusations prove true, it will show that Google could be taking a much stronger approach to its platform than previously thought. Android might not end up being as open as Google has preached. But it could be more profitable for Google in the end and potentially a little less friendly for developers and others in the ecosystem. We’ll have to see if this case is a glimpse of that or just an isolated event.

UPDATE: Google got back to me and shared a short statement: “We remove applications from Android Market that violate our terms of service.” A spokesman directed me to the Android Market Developer Distribution Agreement and Android Market Developer Program Policies. It’s unclear exactly what the problem is because Google has not officially said why it pulled the Visual VoiceMail app. It’s possible that the app may have been cited for offering an ad-free version on the web. In essence, it might have run afoul of the same non-compete clause that apparently got the Kongregate Arcade app pulled when it first went on sale in Android Market because it appeared to be too close to an app serving as an app store. If that’s the case, it could be another sign that Google is not going to tolerate apps that serve as competition for Android Market. I’ll update more as I get information.

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  1. It’s hard to believe that Google did not give a warning, but if they did not, I believe that they should have. With long agreements, it’s easy for a developer to miss something and not be in compliance.

    1. Jonathan Hollander Ryan Saturday, February 26, 2011

      Ryan,

      Here is a complete copy of the very fist email we got from Google about this.

      From: android-market-support+notify@google.com [mailto:android-market-support+notify@google.com]
      Sent: Tuesday, February 22, 2011 7:41 PM
      To: xxxxxxxx@phonefusion.com;
      Subject: Notification from Android Market

      This is a notification that the application, Visual VoiceMail with package ID com.phonefusion.voicemailplus.android has been removed from Android Market due to a violation of the Developer Content Policy. Please review the Content Policies and Business and Program Policies before you create or upload additional applications. Note that repeated violations may result in a suspension of your Android Market Publisher account.

      For more information, or to contact us, please reply to this email, or visit the Android Market Help Center.

      Thanks,

      The Android Market Team

  2. So if I want to get around paying Google its cut of an app I want to sell, let’s say I give away a free trial on the app store. Then when the trial period expires, the user can buy the app from within the trial version, bypassing Google altogether. Is that what Google is trying to prevent?

    I suppose it’s possible that Google does want a cut of fees for content or services sold through an app that is originally obtained through the market, but it’s not clear that is the case. If every developer used the above scheme, Google would be hosting the app store for free, so you can’t blame them for trying to protect the main source of revenue for operating the android market.

    In any case, developers have the option of not selling apps through Android market, as android devices can install apps independent of the market (unlike iOS devices). Google has no monopoly on the distribution of Android apps; not only can you distribute your own apps, but third parties like Amazon are also selling Android apps, and people can download and install apps from anywhere they choose.

    If Google is going to be criticized for this, it should be for not explaining their actions clearly (not the first time they’re guilty of that).

    1. Jonathan Hollander KenG Saturday, February 26, 2011

      Its not a trial version. Its free. And remains free forever.

      “……..as android devices can install apps independent of the market”

      On AT&T devices one cannot install applications that are not downloaded from the market.

      And although on other devices one can install applications from outside the market, some settings have to be changed (depending on the device) and for the average user (non techie or lets just call them an Android beginner) that is not the same one step process as installing something from the market.

  3. Jonathan Hollander Thursday, February 24, 2011

    Hi This is Jonathan Hollander, the one mentioned in the article.

    To answer the 2 comments left so far. the VERY FIRST notice we received about being in violation of the google policies was on Tuesday evening 22nd February at 7.41pm This was also the same time that we found out that the app had been removed from the market. There was no warning or cure period given to us WHATSOEVER.

    KenG is right that people have the option to install apps from anywhere but its not like google makes that easy for the non technical sort. Users must ensure that “Unknown-Sources” is checked in settings. And they need to have some knowledge of side-loading apps.

    More importantly is that we would be OK to comply with the rules if we had just been told we were in violation.

    At this point we have lost :-
    1) The 500,000+ download COVETED rating that we earned over a 2 year period
    2) We lose the 4+ star rating
    3) We lose the 10,000+ comments that people have left – giving us credibility
    4) We lose the right to the name Visual Voicemail as our application as ALL apps in the market must have a unique name.
    5) we are no longer listed in the market whatsoever

    The point is whatever Google business decisions are they need to be
    1) unilaterally enforced
    2) FAIR. – Understanding that other organizations have build LEGITIMATE businesses that they have the power to destroy with a wrong assumption/email.

    1. Dear World:

      Sure, we freely admit we’ve been cheating Google out of money that was rightfully due them, per our Android market agreement.

      But what bothers us is that other such cheats are still getting away with it. That’s patently unfair and, thus, nullifies the agreement.

      Angry Developer

    2. Dear World:

      Sure, we’ve been cheating Google out of money that was rightfully due them, per our Android market agreement.

      But what bothers us is that other such cheats are still getting away with it. That’s patently unfair and, thus, nullifies the agreement.

      Angry Developer

    3. Jonathon, do your arrangements with Google allow you to publish the contents of their letter, or perhaps just the part (if any) that details the violations that you have been found guilty of?

      I understand this might be sensitive, but inasmuch as GigaOM is trying this case in the press, and the article reads, “… Google never made clear what the violation was…” it might be helpful to get a bit deeper into how arbitrary Google is actually being; merely presenting the loss you have experienced strikes me as a bit short of the full story on which we’re being invited to bloviate upon.

  4. Sounds pretty cut and dry

    “In this Agreement, “free” means there are no charges or fees of any kind for use of the Product”

    They were collecting fees on a “free” application. That is against the rules eh?
    They need to label their app as “trial” instead of “free” to charge to use it.

    1. The app is free and remains free for the entire time that you use it.

      It is NOT a trial and it does NOT require any keys or licenses to use it for any extended period of time. The same as our Visual Voicemail apps for WIndows Mobile, Iphone, and Blackberry.

      Feel fre to use it before rushing to judgement :)

  5. Excellent work, Ryan!
    Google is open. Just like the Soviet Union.

    1. I’m going to pull a Godwin and say Apple is open, just like Hitler’s gas chambers.

  6. The thing is, the PhoneFusion app is not a paid app. You don’t have to pay to use the app itself. It has premium features that you pay for, but you don’t HAVE to pay to use the app. So why would Google say that Android users are paying for a free app? Maybe I missed something.

  7. Why was PhoneFusion’s Visual Voicemail app pulled from the Android Market?…

    The explanation in Ryan Kim’s GigaOM piece [1], that Google objected to PhoneFusion selling app add-ons through its website, does not ring true since so many other apps do the same thing. And I have a hard time believing Google was “punishing” a com…

  8. >> It’s unclear when the language in section 3.3 began requiring payments through the “Payment Processor.”

    Why is it unclear? It should not be hard to find a revision history of the document and Google generally does a good job of explicitly tracking changes to its own public documents. Is that not the case here ? At the very least Visual VoiceMail should have a copy of the terms at the start of its own operations. It’s harder to be sympathetic to contract violators complaining about sudden enforcement than with those for whom terms have been changed out from under them.

    1. But there are dozens of other apps in the market doing the same thing (if not hundreds).

      Why the selective enforcement ? And why not give us a period to cure the violation.

      Surely being in the market for OVER 2 years counts for something !!

      And why make us lose our 10,000 comments and 4+ star rating that we earned over 2 years ?

      All we are asking is for them to be reasonable. Their actions seem excessive.

      The only difference between us and other apps in the market is we compete with Google directly and have the largest number of downloads than any other Visual Voicemail competitor. And lets not forget our “PhoneFusion One” product knocks the socks off of Google Voice !!

      BTW we are planning on complying with what google wants.

      The issue here is loosing our status.

      1. From your response, I infer that the terms being enforced now are materially consistent with those you signed up for when you started operations. So you must have considered this risk in your strategy all along.
        You state that Google’s is unreasonably selecting against whom to enforce the rules. By implication, on the grounds that your company is a direct competitor. Looking at this another way, your risk analysis seems even more shaky. Is Google’s action not consistent with those of a vendor of a competing product ? Platforms are inherently risky for developers on them and there’s been quite a bit of discussion around this recently.

        Regardless of which marketplace, I would buy your product if it worked in my country. Google Voice is North America only and it may never get to Japan. International availability would be a great selling point for you.

  9. Android Developer Thursday, February 24, 2011

    Android has been removing many apps.

    Search on google “android market removed”

    They are cracking down.

  10. Jonathan Hollander Thursday, February 24, 2011

    Henchan,

    There are other competitors in the market who sell their products EXACTLY the same way as us. And they have not been suspended. They are discriminating against their largest competitor. This is unfair business. I am all for competition, but FAIR competition.

    The rules have also changed in the 2 years we have had our product in the Market. When we first submitted our app, there was no google checkout.

    Also lets not forget one other thing. Visa & Mastercard charge 3-4% MAXIMUM for processing purchases. Google wants to charge 10% I believe. Where is the fair business in that.

    Stay tuned for some of our Visual Voicemail and PhoneFusion 1 announcements about internationally available products coming soon to a country near you. We are working on a solution for our Japanese friends. (another reason we have Google nervous)

    1. I am not particularly sympathetic to your appeals for fairness. But for me this adds weight to your argument.
      “The rules have also changed in the 2 years we have had our product in the Market. When we first submitted our app, there was no google checkout.”
      In your situation I would probably look into other marketplaces. There should be plenty springing up if Google’s new terms are onerous. Looking forward to your Japan announcement.

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