Starting July 1, 2021, Google will reduce its Play Store commissions from 30% to 15% for almost all developers. Companies will pay the tech giant 15% of the initial fee for their first $1 million of revenue each year. At the same time, Google does not specify whether the commission for app developers will be reduced automatically or they will have to apply for this.
The company says they are aware of the problems faced by companies with annual revenues of $2 million, $5 million, and even $ 10 million. "We believe this is a fair approach that aligns with Google’s broader mission to help all developers succeed. We look forward to sharing full details in the coming months," the company said in a statement.
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According to Google, 99% of developers offering in-app products and services earn less than a million dollars, so most of them will end up paying half of the 30% fee. These savings will help them expand their business, improve their servers, and more. At the same time, 97% of all applications do not sell anything at all and do not pay any service fees.
Earlier, Apple was the first to reduce the App Store commission from 30% to 15%. The new rules came into force on January 1, 2021. Unlike Google, the Cupertino giant's new rules apply to developers whose total revenue is less than $1 million per year.
Google has now followed the lead of Apple, with the only difference that its discount will apply to everyone on the first million dollars in revenue a year, and for the rest, the company will be charged a 30% commission. That is, not only beginner developers, but also large companies with multimillion-dollar revenue will be able to take advantage of the discount on the first million dollars they make in a year.
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The 30% service fee in the Google Play and App Store has been in the public eye lately because of the ongoing dispute between Apple and Epic Games, which will meet in court on May 3, 2021, as well as antitrust proceedings against Google and Apple in the EU and USA.
The search giant is involved in a massive investigation by the US Federal Trade Commission (FTC), which also involves Amazon, Apple, Facebook, and Microsoft.
Commenting on Google's decision to reduce service fees to 15%, Epic Games CEO Tim Sweeney, who advocates increased competition and lower fees on app stores, said that Google and Apple are changing their monopoly policies at the same time in their own interests, so that in the end most developers give up, and they could continue to make money.
It's 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. So Google and Apple can continue to inflate prices and fleece consumers with their app taxes.
— Tim Sweeney (@TimSweeneyEpic) March 16, 2021
He is confident that the commission would be much lower in a free market, and Apple and Google are now simply reducing the level of dissatisfaction among developers (most of whose income will still be subject to a 30% commission) in order to maintain their leading positions.
