Following Apple’s footsteps, Google has revealed a huge change in Google’s Play Store policies. As per the new policy, the company will cut Play Store fees to 15 percent from 30 percent for developer revenue earned via the platform up to USD 1 million.
Google is reducing its long-waiting 30 percent cut, which it takes from each Play Store digital purchase for all Android developers around the world, on the first USD 1 million they make on the digital storefront each year. The change will go into effect as of 1st July.
Once a developer makes over USD 1 million, they are moved back up to the 30 percent rate. While this change to the way the Play Store typically operates likely won’t satisfy large-scale developers, indie studios will be happy to be able to fork over less revenue to Google.
According to Google, the new change means that 99 percent of Android developers selling digital goods or services will experience a 50 percent reduction in fees.
This announcement from Google follows an announcement by Apple of a reduced 15 percent fee last year as part of a new small business program, with one critical difference. Apple made a similar change in November 2020, cutting its revenue share fee to 15 percent for developers making less than USD 1 million in annual revenue. However, if an app maker goes over USD 1 million thresholds it will be dismissed from Apple’s program and will be entitled to the standard 30percen rate.
Google’s program is a flat cut to the first USD 1 million developers make each year. It means whether someone is a student or a multibillion-dollar company, the first USD 1 million they make on the Play Store each year will only get charged a 15 percent service fee by Google.
A Google spokesperson says, “Google is fair in applying reduced fee equally to all firms as this will help developers of all sizes. These investments are critical when developers are in the earlier stages of growth. The growth of an app does not stop once a partner has reached revenue of USD 1 million.”
Google says that only 3 percent of Android developers charge for either downloading their apps or for digital in-app purchases, and only 1 percent of those developers make more than USD 1 million that would see the 30 percent cut.
Google has charged a 30 percent cut for any purchases via Google Play Store since its launch as Android Market. Although the company has always claimed that Google does not take anything, with the 30 percent cut going toward carriers and billing settlement fees. Now as Google Play Store, it plans that 30 percent cut toward its operating fees.
The 30 percent fee has been constant on Google Play Store. The only exception is subscriptions in 2018, Google announced that it would reduce its cut down to 15 percent for subscription products after users had been subscribed for a full year which is another similar move to Apple.
The new policy also comes at a critical moment when Google and Apple’s app store policies are under criticism, after the removal of Epic Games’ Fortnite from both the App Store and Play Store and the game developer’s antitrust lawsuits against Apple and Google.
States like Arizona and North Dakota are contemplating new laws that would force Apple and Google to offer more alternative payment options and software distribution methods on their platforms.
Epic Games, however, still says that Google’s new measure is not as it does not address the root of the issue, and argues that Android needs to be open to competition, among platform firms, app creators, and service providers. The competition in payment processing is the only path to a fair app marketplace.
Google is looking forward to seeing businesses scale to new heights on Android.