After Apple, Google has now decided to reduce its Play Store commission fee after facing backlash from Indian startups. Though, will this move be appreciated by them?
Cut by half
In a blog post, Google announced that starting July 1, 2021, the company is reducing the service fee globally that Google Play receives when a developer sells digital goods or services (does not include physical goods like e-commerce) to 15% (from 30% announced last year) for the first $1 million of revenue every developer earns each year using the Play store’s payment mechanism.
This move comes after the company last year had said that developers would have to pay a flat 30% commission on all in-app purchases and faced a backlash. The implementation of the same was also deferred as many Indian startups protested against the move and accused the global technology giant of abusing the play store’s dominant position in the country by charging such a steep commission.
However, developers in India will have time till March 2022 to integrate Google Play Store billing into their Android apps. For the thousands of developers in India that are already using Play to sell digital goods, they can start receiving the benefit of this change as soon as it goes into effect in July, Google said.
The latest move also follows a similar announcement that Apple made in November last year which reduced the App Store commission to 15% for small businesses earning up to $1 million per year.
“With this change, 99% of developers globally that sell digital goods and services with Play will see a 50% reduction in fees”, Sameer Samat, Vice President, Android & Google Play said in the post. “These are funds that can help developers scale up at a critical phase of their growth by hiring more engineers, adding to their marketing staff, increasing server capacity, and more”, he added.
Many developers stated their concerns about not being able to scale up if they end up paying such a steep amount of their margin to Google. Addressing this, Samat added in the post that “while these investments are most critical when developers are in the earlier stages of growth, scaling an app doesn’t stop once a partner has reached $1 million in 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.”
Explaining the move, he further said, “We believe this is a fair approach that aligns with Google’s broader mission to help all developers succeed. We look forward to sharing full details in the coming months.” 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, the post stated.
Though, many startups have again addressed their concern for the reduced fee as they don’t see this current measure amounting to relaxation and believe that it would come in the way of building sustainable businesses. They also want to have options of using alternative and cheaper payment gateways and feel the 15% commission is still very high.
It will be interesting to see if the fight continues, if so, how it takes shape, and will the involved parties find a middle ground to settle?