Google has decided to half the percentage it takes from its app developers on the sale of the apps in the Google play store. A similar move was taken by Apple last year.
Google said that they are reducing the fees to 15% from 30% for the first $1 million in revenue on sales of apps and in-app-purchases each year. After the first $1 million, developers will pay the typical 30% fee.
Though Apple made a similar move last year, this program from Google is different. The difference lies in the fact that Apple gives this reduction in fees to smaller developers only. Smaller developers refer to those developers who made around $1 million last year.
To quote from a blog post of Google, “Scaling an app doesn’t stop once a partner has reached $1M in revenue—we’ve heard from our partners making $2M, $5M and even $10M a year that their services are still on a path to self-sustaining orbit. This is why we are making this reduced fee on the first $1M of total revenue earned each year available to every Play developer, regardless of size.”
The two companies Apple and Google rule the economy of the app world of the Western side completely. The companies are under immense pressure nowadays since that the app developers are not able to bear the high fees of the app stores and difficult rules which are in turn increases the cost for the consumers. According to the analytics firm App Annie, in 2020 $143 billion was spent on mobile app stores. This was a 20% increase from the year before that.
Bloomberg News reported in December that there we three U.S. states who were preparing to file a lawsuit on the grounds of antitrust. They were scrutinizing the fees that Google charges from its developers for filing the case. They were preparing to lodge the case as soon as possible this year. On the other hand, The European Union and U.K. Authorities are looking into the fees that Apple charges the app developers of the Apple App Store.
Google also mentioned that 99% that the maximum of the developers will pay the reduced 15% fees only as there are only 1% of developers who make more than $1 million in revenue. They further added that only 3% of developers have a charge for using their apps and services.
A research firm SensorTower said that in 2020, Google Play Store has produced an estimated value of around $11.6 billion in fees for Google. The firm further added that the company would have not got around $587 million (5%) if this new system had been launched last year. SensorTower also estimated Apple to have produced a huge amount of $21.7 billion from its app store fees last year.
Fortnite is a very popular video game that was available in the app stores of both Google and Apple previously. Its makers Epic Games Inc. has charged Google alleging they have forced the app developers to make use of the Play Store’s payment system misusing the control that they have on the Android Mobile operation System. Along with Google, they have also pressed charges against Apple. Both Apple and Google threw out Fortnite from their stores last year after they were found avoiding their rules. On Tuesday Epic Games said that Google’s new update is still not enough. To quote an Epic Games spokesman, “While a reduction in the Google app tax may alleviate a small part of the financial burden developers have been shouldering, this does not address the root of the issue.” He added, “Android needs to be fully open to competition, with a genuinely level playing field among platform companies, app creators, and service providers. Competition in payment processing and app distribution is the only path to a fair app marketplace.”
Google has said that the new policy will come into effect from 1st July. The developers will have to register themselves once in the new program and from thereon it will renew itself every year by itself. This new policy will not only help Google turn away antitrust investigation from regulators but will also help the developers to save some money which can be then used to hire more engineers and invest in their app in the future.