Google has announced a reduction in its commission on the Play Store for all developers. The fee will drop from 30% to 15% for all developers, without distinction. The new policy comes months after Apple launched a similar change to its App Store, which is more focused on SMEs.
With this change, 99% of developers worldwide who sell digital goods and services on Play will see a 50% reduction in fees. These funds will be able to help developers scale at a critical stage of their growth, hiring more engineers, more marketing staff, increasing their server capacity and more.
The search engine company is following in the wake of a similar programme launched by Apple at the end of 2020. On this occasion, the discount on the commission is also 15%, but it only applies to companies whose turnover is less than one million dollars a year.
The situation on the Android platform is not the same as on the Apple platform. Google allows other third-party app shops on its platform, which circumvent its payment system. So developers do not necessarily have to resort to Google’s system. Unlike Apple’s programme, Google’s new measure applies to the first $1 million of all its developers’ first $1 million.
These new fees are designed to benefit developers who are just starting out. And, in the case of the App Store, it will benefit 97.4% of developers. In other words, the vast majority of them are SMEs, although their impact on turnover is very small: only 7.6%.
“While a reduction in Google’s tax may alleviate a small part of the financial burden developers have been bearing, it does not solve the root of the problem. Whether it’s 15% or 30% for all apps obtained through the Google Play Store, developers are forced to use Google’s in-app payment services.”
This is the comment by Epic Games. Epic Games has repeatedly said that its intention is not to attack and eliminate the commission but to allow other digital shops and other payment systems. This is tantamount to taking control of the shops away from Apple and Google. Although we could say that Google is there simply to make it look like they are not going after Apple alone, as they do allow other shops on Android.
Despite the eye-catching nature of the action, these commission reductions amount to less than 5% of Apple and Google’s shop revenues. This is because the bulk of the revenue comes from games and apps from large developers with hundreds or billions of dollars in revenue. Some of them, like Epic Games, sell virtual currencies that have a zero cost of manufacture and a 100% profit.
Apple has to try to balance the tricky balancing act between the interests of users, developers and its own interests in the App Store. With measures such as the 15% reduction for small and medium-sized businesses, the Cupertino-based company is aiming to please these companies and avoid the temptation to join Epic Games’ crusade. A fight that, if successful, would upset the balance and open a Pandora’s box with unforeseeable consequences for everyone.