Google move to cut Play Store fee could help ‘boutique’ apps, but not big developers

In a move that brings relief to thousands of developers across the world, Google has decided that from July 1 it will take just a 15 per cent cut — down from the present 30 per cent — on the first $1 million revenue earned by apps on Google Play. While the move does not change much for big apps, it does help smaller apps and game developers in a big way.

“Reduction of commission fees is likely to benefit boutique firms, individual application developers and early stage startups,” Manjunath Bhat, Sr Director Analyst, Gartner, tells Indianexpress.com. “It will have little to no impact on large established application development companies in India.”

Sameer Samat, VP of Android and Google Play, wrote in a blog post that “99% of developers globally that sell digital goods and services with Play will see a 50% reduction in fees.” Developers with a total revenue over $1 million each year will still need to pay a 30 per cent fee to Google.

Google’s announcement follows a similar move by Apple last year when the Cupertino company said it will reduce its fee from 30 per cent to 15 per cent from January, for developers who make less than $1 million annually. However, Google’s approach is slightly different. In the case of Apple, the company’s App Store Small Business Program applies to only those developers who earn less than $1 million in annual sales per year from all of their apps – and once they make more than $1 million, they are charged at a standard rate. Google, meanwhile, says the cut applies to the first $1 million regardless of total revenue. “We’ve heard from our partners making $2 million, $5 million and even $10 million a year that their services are still on a path to self-sustaining orbit,” Samat said.

Both Apple and Google in recent months have come under fire from large firms such as Epic Games and Spotify, as well as from smaller developers, who allege that the current business practises applied by the two tech giants are harming the tech market. In fact, Apple’s legal fight with Fortnite creator Epic Games has put the company under increased scrutiny from regulators. Because both Apple and Google control the most popular App Stores as well as the entire smartphone market and the ecosystem, many developers say they have no options but to follow the rules laid by the two companies and pay the fees.

“In a country like India, it particularly makes a big difference,” says Rajan Navani, Vice Chairman & Managing Director, JetSynthesys. “I think in a way it helps support the Indian ecosystem, especially the smaller developers.”

Navani, whose company develops popular mobile games for Android, says a reduction in the Play Store fees will make a bigger impact because the app monetization on Google’s platform is much larger. “If we look at Google’s platform numbers, they are somewhere in the range of 30 to 40 per cent growth in app purchases in India,” he said. “ It’s a good move, because with new developers coming in, more companies will engage with citizens through digital payments,”

The move is more significant also because Android dominates the smartphone market in India. The change, even though not specific to India, comes a few months after Google faced criticism from high-profile local startups including Paytm over a move to charge a 30 per cent commission for in-app purchases.

Vijay Shekhar Sharma, founder of Paytm, called Google “judge, jury and executioner” after the Mountain View giant temporarily delisted the popular payments app from the Android app store for a policy violation. Following the backlash, Google had to delay its 30 per cent Play Store cut in India to April 2022.

“The commission reduction is a step forward in growing this market,” Bhat said. “A lot lies ahead in the journey of platform innovation, democratising access to the platform and monetising platform services in India.”