Google has to fix Android piracy issue. But how?

It's no secret that the Google's Play Store is seriously hurting from piracy. Many app developers are hesitant to release their apps on iOS, and those who do often struggle to find adequate ways of monetizing their apps.

SlashGear documentes one extreme, but still telling case of android piracy. They state that developers Butterscotch Shenanigans have seen a 95% piracy rate of their $.99 app. In contrast, the iOS piracy rate was a measly 5%. While this magnitude is not likely typical of every developers android experience, the gap between iOS and Android piracy rates is very real and problematic.

The question is, can this problem be solved? It's difficult to expect people not to pirate apps on a platform in which pirating is as easy as a simple Google search and .APK install. Google has a serious Catch-22 on their hands. Google can't continue to let piracy run rampant and expect the Play Store to reach true App Store quality, but also can't abandon Androids promise of openness in order to fix it. If they were to say that the next version of Android would not be able to side load apps, there would be a backlash among the android faithful and the probably the ROM'ing community.

Google can implement some policies that may help curb Play store piracy (and I believe they have to a small extent), but will it ever be possible to lower rates down to iOS levels? Now that I've given you my view on the issue, I'm curious to see how much of a problem you all see this as, and if/how this is fixable. What should Google do?