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Delayed Quote. Delayed Nasdaq - 10/14 04:00:00 pm
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Alphabet : Google Shuts Out Payday Loans With App Store Ban

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10/12/2019 | 07:40am EDT

By Yuka Hayashi

WASHINGTON -- Google has barred high-interest consumer loan services from its app store, limiting payday lenders' access to customers.

The tech giant recently prohibited apps from offering personal loans with an annual percentage rate of 36% or higher on its Google Play app store. The move inserted the technology giant into a fight over payday loans, which often carry triple-digit interest rates. The shift was quietly implemented in August with an update to Google's app development guidelines for the Android operating system, prompting an outcry from payday-lending companies.

"Our Google Play developer policies are designed to protect users and keep them safe," a Google spokesman said. "We expanded our financial services policy to protect people from deceptive and exploitative personal loan terms."

Google's decision raises questions about large corporations influencing markets for legal but controversial products. Retailers such as Walmart Inc. and Dick's Sporting Goods Inc. have drawn praise and criticism for decisions to restrict the sale of firearms and related products in confronting gun violence. Several banks including Bank of America Corp. and Morgan Stanley have said in recent months they would cease doing business with companies that run private prisons and detention centers.

"It hinges on the question of how we feel about a relatively small number of companies who have achieved very significant market power," said Brian Knight, director of innovation and governance at George Mason University's Mercatus Center, a free-market advocacy group. "And how do we feel about their using that power to try to nudge or disavow certain legal business models?"

Google, owned by Alphabet Inc., in 2016 implemented a ban on payday loan ads in its search browser, saying financial services ads are "core to people's livelihood and well being."

Some states such as California and Ohio have taken new steps to crack down on high-interest loans, while the Trump administration has sought to reverse Obama-era policies aimed at reining in these lenders. In California, Gov. Gavin Newsom on Thursday signed into law a new 36% interest rate cap on consumer loans of $2,500 to $10,000.

Payday loans are effectively banned in more than a dozen states that impose interest rate caps, but are permitted in other states.

Among the lenders affected by the new restriction are CURO Financial Technology Corp., Enova International Inc. and MoneyLion. To remain in Google Play, lenders would have to adjust their products offered on Android apps to meet Google's requirements.

"What Google is doing is unfair in the commerce world," said Mary Jackson, chief executive of Online Lenders Alliance, which represents large online lenders including CURO and Enova. "It harms legitimate operators and harms consumers looking for legal loans."

CURO and MoneyLion didn't respond to requests for comment. An Enova spokeswoman referred the question to the online lenders group.

Android users could still use web browsers to sign up for and manage high-interest loans, or download apps from non-Google sources, though Google discourages such apps for security reasons.

Consumer advocates praised Google's decision, citing overlap between payday-loan customers, who tend to have lower incomes, and users of Android devices, which are generally less expensive than Apple Inc. products.

Comscore Inc., a data research firm, estimates that among consumers belonging to households earning less than $25,000 a year, 51.8% own Android phones and 28.9% own iPhones. For those making $250,000 or more, 30.8% own Android products and 59.7% own iPhones. The estimates are based on surveys of 30,000 owners of mobile phones and tablets conducted between June and August this year.

"This policy change effectively cuts off the Google Play store as a vehicle for predatory loans," says Arisha Hatch, vice president for Color of Change, an African-American advocacy group that pressed Google for the app ban.

The group said it plans to push for a similar ban from Apple, which didn't respond to its request earlier this year. An Apple spokesman said the company periodically reviews its App Store guidelines to "address new or emerging issue that affect our customers," without discussing its policy on payday loan apps.

Write to Yuka Hayashi at yuka.hayashi@wsj.com

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Financials (USD)
Sales 2019 162 B
EBIT 2019 35 432 M
Net income 2019 34 115 M
Finance 2019 124 B
Yield 2019 -
P/E ratio 2019 25,0x
P/E ratio 2020 21,9x
EV / Sales2019 4,44x
EV / Sales2020 3,64x
Capitalization 844 B
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