In a move that brings relief to thousands of developers around the world, Google has decided that as of July 1 it will only reduce 15% (from 30% today) of the first revenue of $ 1 million earned by applications on Google Play. While the metric doesn’t change much for large applications, it does help smaller applications and game developers in a big way.
“Reducing fees is likely to benefit boutique companies, individual application developers and start-ups,” explains Manjunath Bhat, Senior Analyst at Gartner. NEWS BLOCK.com. “It will have little to no impact on large application development companies based in India.”
Sameer Samat, vice president of Android and Google Play, wrote in a blog post that “99% of developers globally who sell digital goods and services with Play will see a 50% reduction in fees.” Developers with a total income of more than $ 1 million each year will be required to pay a 30 percent fee to Google.
Google’s announcement follows a similar move by Apple last year when the Cupertino company said it will cut its fee from 30 percent to 15 percent starting in January, for developers making less than $ 1 million a year. However, Google’s approach is slightly different. In Apple’s case, the company’s app store small business program applies only to those developers who make less than $ 1 million in annual sales per year from all of their apps, and once they earn more than $ 1 million, they are charged at a standard rate. Meanwhile, Google says the cut applies to the first million dollars regardless of total revenue. “We have heard from our partners making $ 2 million, $ 5 million and even $ 10 million a year that their services are still on the way to a self-sustaining orbit,” Samat said.
Both Apple and Google in recent months have come under fire from large firms such as Epic Games and Spotify, as well as smaller developers, who allege that current business practices applied by the two tech giants are hurting the tech market. In fact, Apple’s legal fight with Fortnite creator Epic Games has put the company under increased scrutiny from regulators. Because both Apple and Google control the most popular app stores, as well as the entire smartphone market and ecosystem, many developers say they have no choice but to follow the rules set by the two companies and pay the fees.
“In a country like India, this makes a huge difference,” says Rajan Navani, Vice President and CEO of JetSynthesys. “I think in a way it helps to support the Indian ecosystem, especially the smaller developers.”
Navani, whose company develops popular mobile games for Android, says that a reduction in Play Store fees will have a bigger impact because the monetization of the app on Google’s platform is much higher. “If you look at the numbers from Google’s platform, they are somewhere in the range of 30 to 40 percent growth in app purchases in India,” he said. “It is a good move, because with the arrival of new developers, more companies will engage with citizens through digital payments.”
The move is more significant also because Android dominates the smartphone market in India. The change, while not specific to India, comes a few months after Google faced criticism from high-profile local startups, including Paytm, for a move to charge a 30 percent commission on purchases within the application.
Vijay Shekhar Sharma, founder of Paytm, called Google a “judge, jury and executioner” after the Mountain View giant temporarily removed the popular payments app from the Android app store for a violation of the policy. Following the backlash, Google had to delay its 30 percent cut in the Play Store in India until April 2022.
“The commission reduction is a step forward in the growth of this market,” said Bhat. “Much remains to be done in the journey of platform innovation, democratization of platform access and monetization of platform services in India.”