In March, Google had announced that it would reduce the 30% Play Store commission to 15% for the first $1 million that Android developers who use its billing system earn each year.
Amid increasing regulatory pressure on the Play Store for Android, Google has announced that it is now making another change to its business model, as part of which more app categories will be eligible to pay significantly less than the usual 30% fee. The company announced that it’s decreasing the service fee for all subscription-based apps on Google Play from 30% to 15%, starting from day one.
The company also announced that e-book and on-demand music streaming apps in the Play Media Experience Program, which Google announced earlier this year, will now be eligible for a service fee of as low as 10%.
Google says the new fees will start from January 1, 2022 and it states that 99% of developers qualify for a service fee of 15% or less.
“Digital subscriptions have become one of the fastest growing models for developers but we know that subscription businesses face specific challenges in customer acquisition and retention,” said Google’s Sameer Samat, vice president, Product Management, in an announcement.
“We’ve worked with our partners in dating, fitness, education and other sectors to understand the nuances of their businesses. Our current service fee drops from 30% to 15% after 12 months of a recurring subscription. But we’ve heard that customer churn makes it challenging for subscription businesses to benefit from that reduced rate. So, we’re simplifying things to ensure they can,” he said.
Google said it spoke with the developer community to help determine the new fee structure and received feedback from a variety of developers across industries and industries, including Anghami, AWA, Bumble, Calm, Duolingo, KADOKAWA, KKBOX, Picsart, and Smule.
Google’s move comes at a time of increasing regulatory scrutiny over app stores and various antitrust lawsuits.
At the end of August, South Korea’s parliament passed a bill which will bar tech companies operating app stores in the country including Apple and Google from requiring developers to use their own payment systems that charge them up to 30%. Google has said that it would comply. A Google spokesperson had said: “We’ll reflect on how to comply with this law while maintaining a model that supports a high-quality operating system and app store, and we will share more in the coming weeks.’’
According to Reuters, Apple and Google have been asked to turn in by mid-October compliance plans for the new South Korean law, which is yet to come to effect.
The company is also in a legal battle with Epic Games. As part of the ongoing lawsuit, the Fortnite-maker alleged that Google paid top video game developers and phone manufacturers to maintain its Play Store monopoly and prevent a $1.1 billion loss in annual profit.
Google is also facing a major antitrust lawsuit led by Utah, Washington DC and 35 other US states over its Play Store practices.