Google is lowering its app store fees for all subscription-based services to 15 percent from the existing 30 percent from January 1, 2022. This comes as the internet giant faces increased scrutiny over its app store practices in India and across the world.
Google currently levies a 30 percent fee for all subscription services which reduces to 15 percent after 12 months of a recurring subscription. "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" said Sameer Samat, Vice President, Product Management, Google in a blogpost.
Google said that ebooks and on-demand music streaming services, where "content costs account for the majority of sales", will be eligible for a further decrease in its service fee, which "can be as low as 10 percent".
It's worth noting that the reduction in this specific category, which Google terms as Media Experience program, is at the company's discretion and based on high content costs, it said.
"The new rates recognize industry economics of media content verticals and make Google Play work better for developers and the communities of artists, musicians and authors they represent" Samat said.
In the blogpost, Samat noted that 99% of developers qualify for a service fee of 15% or less and these changes were made after "learning from and listening" to developers across many industries and regions, including developers like Bumble, Calm, Duolingo, PicsArt, and Smule and will help them "build sustainable businesses"
"We will continue to engage with developers to understand their challenges and opportunities — and how we can best support them in building sustainable businesses," said Samat.
Backlash against Google's Play Store commission
While Google has always charged a 30 percent commission for apps selling digital goods on their app stores, the firm said in October last year that it will more proactively enforce this commission starting September 30, 2021. It had then noted that the change is expected to impact less than 3 percent of apps on Play Store that are currently not using the company's billing system.
However, following a massive push back from the Indian developer community, the tech giant delayed the implementation to March 2022. Google also announced the reduction of its commission rate to 15 percent for the first $1 million revenue developers earn using the Play billing system every year in March 2021, which came into effect in July 2021.
That said, Google is currently facing a probe from India's antitrust body Competition Commission of India (CCI) over the issue of mandatory use of Google Play Store’s payment system for paid apps & in-app purchases. The commission is of the prima facie view that such a policy is unfair as it restricts the ability of app developers to select a payment processing system of their choice.
On October 11, 2021, Moneycontrol had reported that The Alliance of Digital India Foundation (ADIF), a New Delhi think tank consisting of entrepreneurs and startups, had moved CCI to seek interim relief against the implementation of Google Play Store commission till the investigation into the tech giant’s abuse of dominance is complete.
Apart from India, Google and Apple are facing scrutiny over business practices related to their respective app marketplaces in several countries including the United States.
In September, South Korea's parliament had approved a bill that bans app store operators like Google and Apple from forcing app developers to use their own billing systems for in-app purchases.