As regulatory pressure on the Android Play Store increases, Google is once again changing its business structure. He announced that more categories of apps will be eligible to pay much less than the usual 30% fee. The company announces that all subscription apps will now pay a 15% fee. It is also stated that “ebooks and music streaming services on demand” will be “eligible” for charges “as low as 10%”.
The reason Google gives for the lower prices of eBooks and music streaming apps is that “content costs account for the majority of sales” and that pricing “recognizes the economics of the industry of content verticals. multimedia ”. It is not said, but also surely true, that regulatory pressure and public pressure from companies like Spotify were factored into Google’s decision. Currently, purchasing a Spotify subscription on Android redirects you to the Spotify website to enter your payment information.
The lower pricing structure for music streaming is still at Google’s discretion, both for qualifying apps and the amount of those charges. When asked how developers could know exactly if they could benefit from the reduced fees, a Google spokesperson said, “Developers can review the program guidelines and express their interest now and we will provide you with more information. ‘information if they are eligible’.
As for subscriptions, Google’s previous structure was similar to Apple’s: 30% the first year, 15% thereafter. The new change simplifies that by offering 15% upfront and is likely a strong incentive for developers to switch from one-time payments to subscriptions. According to Google, one of the reasons for this change is that “we have heard that the customer churn rate makes it difficult for subscription companies to take advantage of this reduced rate.”
Google already has a program in which the first million dollars a developer earns through Google requires a 15 percent cut, instituted in March 2021. And since so many apps are ad-based and therefore free, the company claims that 99 percent of developers “qualify for a service charge of 15% or less.” “
South Korea recently decided that Google must allow third-party payments in its Google Play ecosystem and Google has said it will comply. In an interview with The edge Last week, CEO Sundar Pichai spoke about the importance of Google Play revenue to the overall Android business model for Google (emphasis added below):
We do not take a share of device sales, not a share of the operator’s revenue. So in a way we have to support our ecosystem. We have a different model. Google Play is an important medium. In fact, it is the main source of income. It supports Android as a whole. I think we’re going to clarify that point of view, but we’re going to start some conversations. I leave it up to the team to determine the next steps to take.
In-app payments for games are a great source of income. On this front, Google is in a legal battle with Epic Games over Fortnite, which is not available in the Google Play Store (but can be loaded through a relatively expensive process). Google is also facing a lawsuit filed by a coalition of 36 state attorneys general over antitrust issues with the Google Play Store.
Add it all up and it’s obvious that Google is doing what it can to put in relief valves for all that pressure while cutting store fees where it sees fit. Google has lined up positive quotes from Bumble and Duolingo in support of its lower subscription fees, a message surely aimed at regulators. And the company will likely continue to bring out developers who aren’t angry with the Play Store business model at its Developer Summit next week.
We asked Google for comment on whether these changes were in response to regulatory pressures, and a spokesperson responded, “Google has a long history of evolving the Android and Play model based on feedback from our developer ecosystem on what. they need to be successful on Play. “
Yet that is not going to bring Fortnite back to the Play Store (since it won’t be eligible) and it’s far from clear that the lower fees will appease regulators anywhere. The pressure on Google and Apple to reduce their App Store fees is already paying off. Despite these changes, it still looks like the pressure will lead to actual legal action – either through the courts or through Congress.