Google is reducing its long-standing 30 percent cut, which it takes from each Play Store digital purchase for all Android developers around the world, on the first $1 million they make on the digital storefront each year, starting on July 1st. According to Google, that change means that 99 percent of Android developers that “that sell digital goods or services” will see a 50 percent reduction in fees.
Google’s news follows Apple’s announcement of a reduced 15 percent fee last year as part of a new small business program, with one critical difference: Apple’s fee reduction only applies to developers that make under $1 million per year. But if an app maker goes over the $1 million threshold at any point in the year, they’ll be booted from Apple’s program and subject to the standard 30 percent rate.
Google’s program is a flat cut to the first $1 million developers make each year. That means whether you’re a student making your first app or a multibillion-dollar company, the first $1 million you make on the Play Store each year will only get charged a 15 percent service fee by Google. Any money you make after that will then be subject to the usual 30 percent cut. A Google spokesperson says the company felt that applying the reduced fees equally to all companies was a fair approach in line with Google’s goals of helping developers of all sizes.
Google has charged a 30 percent cut for any purchases through the Google Play Store since it first launched as the “Android Market” — although originally, the company claimed that “Google does not take a percentage,” with the 30 percent cut going toward “carriers and billing settlement fees.” In its more modern incarnation as the Play Store, Google now puts that 30 percent cut toward its “distribution partner and operating fees.”
The 30 percent fee has been constant for the lifespan of Google’s storefront. The only exception is subscriptions: in 2018, Google (in another similar move to Apple) announced that it would reduce its cut down to 15 percent for subscription products after users had been subscribed for a full year.
The number of developers that make more than $1 million each year — and will end up still being charged the full 30 percent — is proportionally tiny. Google notes that only about 3 percent of Android developers actually charge for either downloading their apps or for digital in-app purchases to begin with, and only 1 percent of those developers make more than the $1 million threshold that would see the 30 percent cut kick in.
The new policy also comes at a critical moment when Google (and Apple’s) app store policies are under intense public scrutiny, kicked off by the removal of Epic Games’ Fortnite from both the App Store and Play Store and the game developer’s subsequent antitrust lawsuits against Apple and Google.
The issue is also coming to a head in legislation, with states like Arizona and North Dakota debating new laws that would force Apple and Google to offer more alternative software distribution methods and payment options on their platforms.
Epic Games, however, still says that Google’s new measure isn’t nearly far enough, noting that it “does not address the root of the issue,” and arguing that “Android needs to be fully open to competition, with a genuinely level playing field among platform companies, app creators, and service providers. Competition in payment processing and app distribution is the only path to a fair app marketplace.”
It’s scary for the tech industry to that see Google and Apple aligning their monopolistic policies in near lock-step. In a free app market, rates would be much lower for all due to competition, and not subject to their divide-and-conquer tactics.
— Tim Sweeney (@TimSweeneyEpic) March 16, 2021
Update March 16th, 11:50am: Added Epic Games statement, and clarified Android developer groups that will see a reduction of fees.