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Google internally reconsidering its Play fee: “will anything lower than 30 percent be too low?”

We just saw an internal document where Google attempted to use game theory to figure out what would happen if it decoupled Google Play Billing from Google Play app distribution and decided to compete with other payment processors itself.

It included a graph that suggested many developers would change to a rival payment processor right away — “some large developers would take advantage of billing optionality no matter the price,” wrote Google — but that most others wouldn’t pick Google until or unless it offered a substantial discount.

Tadelis showed us that Google’s User Choice Billing, which nominally offers a mere 4 percent discount (though secretly goes far lower), wouldn’t come close to the place on the graph where it would convince developers to pick Google.

Tadelis says User Choice Billing is not a good deal, and Google knows it.

I wish I could show you a picture of the graph since it’s difficult to describe. No cameras in the courtroom; we should get a copy after the trial concludes.

It’s Google’s turn to question Tadelis now.