- Google announces the reduction of the service fees for Google Play from 30% to 15% effective from July 1.
- Epic CEO Tim Sweeney calls the policy a divide between the app creators.
Introduction:
Google on Tuesday that from July 1 that it will reduce the service fee for Google Play from 30% to 15%. This is for the first dollar 1 million of revenue developers who earn using the Play billing system every year. The company will impose a 30% deduction on every dollar that developers generate. Google Play beyond the first dollar 1 million in a year, it says.
Statement from Google’s Sameer Samat:
“We’ve heard from our partners making $2 million, $5 million, and even $10 million a year. Their services are still on a path to self-sustaining orbit,” wrote Sameer Samat, VP of Android and Google Play, in a blog post.
“This is why we are making this reduced fee on the first $1 million of total revenue earned each year. It will be available to every Play developer that uses the Play billing system, regardless of size. We believe this is a fair approach that aligns with Google’s broader mission to help all developers succeed.”
The move comes months after Google implemented changes in its billing system and charges rattled many startups in India. Over 150 startups came together last year after Google announced that it will collect as high as 30% cut on in-app purchases in a wide range of categories made by Android apps.
The delay in the policy because of backlash:
Because of the backlash Google has delayed mandating the planned Play Store payments rule in India to April 2022. Meantime it has reached out to various forms in the last few months in India to understand their concerns. Vijay Shekhar Sharma, who happens to be the founder and chief executive of mobile payments provider Paytm dismissed Google’s move as a “publicity stunt”.
According to Sharma, the established forms will have to pay a very high amount of fees to Google. He also adds that this raises the concern of whether Google plans to address issues raised by serious internet firms at all. The most important concern that forms have been facing today is the inability to use third-party payment resources for billing, he says. “They are basically saying that as soon as you build a business larger than $1 million. It is a very low bar — you are going to pay a 30% fee, which after taxes, becomes 44%,” said Sharma, whose Paytm app competes with Google Pay in India.
Epic CEO Tim Sweeney alleges that Apple lowered the app store fee for small developers to create a divide amongst the app creators.
Statement from Epic’s representative:
“While a reduction in the Google app tax may alleviate a small part of the financial burden developers have been shouldering, this does not address the root of the issue. Whether it’s 15% or 30%, for apps obtained through the Google Play Store, developers are forced to use Google’s in-app payment services. 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,” said a representative of Epic Games in a statement.
Sharma hopes that Google will address concerns specifically because in a country like India. “We don’t have any other operating system or distribution platform. They effectively control the destiny of every app developer in the country.”
Google’s Samat adds, “We look forward to seeing more businesses scale to new heights on Android. And to further discussions with the Indian developer community to find new ways to support them. We’re looking to support them technically and economically as they build their businesses.”
“Once developers confirm some basic information to help us understand any associated accounts they have. And ensure we apply the 15% properly, this discount will automatically renew each year,” he wrote.
