Google Will Lower Some Payment Fees for App Developers

Google announced it will collect only 15% on payments made to developers through its app marketplace, the Google Play Store, for the first $1 million in annual sales. After that point, the tech company will begin charging its regular 30% fee, a move that mainly benefits smaller mobile app developers. The new policy kicks in on July 1. The move follows a similar course of action taken by Apple this fall when the company, which controls the other major mobile app marketplace, reduced its cut to 15% for developers who make under $1 million in annual sales. The Google plan allows those who exceed that benchmark to still benefit from the lower rate on their first $1 million earned each year. “While these investments are most critical when developers are in the earlier stages of growth, scaling an app doesn’t stop once a partner has reached $1M in revenue,” wrote Sameer Samat, Google’s vp of product management wrote in a blog post Tuesday. “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 app intelligence provider Sensor Tower estimates that had the new 15% fee been applied in 2020, Google would have surrendered $587 million—about 5% of the $11.6 billion the company estimates Google took in from the Play Store last year. Apple’s policy, if applied to all of 2020, would have cost the company $595 million, or 2.7% of the $21.7 billion it brought in from the App Store. Google and Apple have faced intense criticism from app developers and regulators over their control of their respective app marketplaces. Epic Games, the company behind the immensely popular multiplayer game Fortnite, was booted off both app stores after directing users to their own controlled payment systems. The developer has since sued both companies for anticompetitive behavior and co-founded the Coalition for App Fairness, alongside Spotify, Basecamp and Match Group and others, to lobby against Apple and Google’s dominance. A bill that recently passed the Arizona State House would allow developers to bypass Google and Apple’s payment fees. It also awaits a vote in the state Senate and would need the governor’s signature. Additionally, the European Union is expected to bring antitrust charges against Apple for the first time over its app store practices in response to a 2019 complaint from Spotify. The U.K.’s antitrust authority is also set to investigate Apple for the same reasons. In the U.S. House of Representatives’ antitrust report, published this fall, legislators painted an overbearing and anti-competitive environment for Google (and had similar claims against Apple). The House Judiciary Committee also announced a bipartisan investigation into competition in digital markets. In its findings it found that Google can “exert control and engage in conduct that harms competition by exploiting, excluding and discriminating against rivals” through its control of its app marketplace, even if apps can be “sideloaded” outside the store. The report makes a similar claim about Apple. Google and Apple have effective control over the apps developed on their respective mobile operating systems, Android OS and iOS. Apple’s lawyers have complained that changes to this structure would prevent the company from using “its own check-out lane in the store we built.” https://twitter.com/TimSweeneyEpic/status/1371854312507330561 Until regulation arrives, app developers are dead set on affecting change within the closed marketplaces. Tim Sweeney, founder and CEO of Epic Games, called Google’s last move a “self-serving gambit.” “The far majority of developers will get this new 15% rate and thus be less inclined to fight, but the far majority of revenue is in apps with the 30% rate,” Sweeney continued in a tweet. “So Google and Apple can continue to inflate prices and fleece consumers with their app taxes.”

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Google Will Lower Some Payment Fees for App Developers

The move comes as regulator pressure mounts

Scott Nover

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