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March 16, 2021
3 Min Read
Google is following in Apple's footsteps and making changes to how it handles revenue splits on mobile. The tech giant has announced plans to reduce the standard cut it takes from all Google Play revenue from 30 percent to 15 percent, but only for developers earning under a certain threshold each year.
Starting on July 1, any developer or publisher launching an app on Google Play will only have to fork over 15 percent of their revenue, so long as their revenue for that year stays below $1 million. According to a blog post from Google, this will reduce platform fees by half for 99 percent of the developers on the Google Play Store.
Per that same blog post, the fees will return to the standard 30 percent once a developer's revenue for the year crosses over that $1 million line. Google notes that reducing the fee for devs earning under $1 million aims to give those teams access to cash needed to scale up what it calls a "critical phase of their growth."
It's similar to a move made by Apple that went into effect earlier this year, but there is one crucial difference between the two platform fee reductions. Apple's scheme looks at a developer or publisher's revenue for the previous calendar year and decreases the fee from 30 percent to 15 percent only if that previous year saw less than $1 million in revenue.
Google's plan, meanwhile, resets every year, meaning a developer that earns over $1 million in 2021 will still start 2022 with Google taking only a 15 percent cut, up until 2022's yearly revenue surpasses the $1 million mark. In that blog post, Google explains the yearly reset aims to ensure mobile developers of all sizes have access to resources during growth-critical moments.
"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 $1M in revenue — we’ve heard from our partners making $2M, $5M and even $10M a year that their services are still on a path to self-sustaining orbit," explains Google, in addition to promising more details in the coming months.
"This is why we are making this reduced fee on the first $1M of total revenue earned each year available to every Play developer, regardless of size. We believe this is a fair approach that aligns with Google’s broader mission to help all developers succeed."
Of course it's impossible to mention any change to app store and platform fees without calling attention to the lawsuit that likely kicked many of the conversations off to begin with. Epic Games is currently wrapped up in cases against both Apple and Google, arguing that both platforms are, to different degrees, fostering anti-competitive spaces. Part of Epic's argument is that developers would be able to keep a larger share of their earnings if Apple didn't mandate a 30 percent cut across the board or if it allowed other storefronts and payment methods to exist on iOS to foster healthy competition.
Its complaints against Google are similar; while Google does allow other storefronts to exist on Android, Epic argues that it makes it difficult and sometimes alarming for users to use an alternative storefront due to security warnings and hidden settings that must first be changed to even allow downloads from third-party app stores.
Of course, neither Google nor Apple mention their own conflicts with Epic Games as something that had any influence on the recent decisions to shift platform fee policies. However, Epic did respond to Apple's decision to change its fee structure last year, firing back that the new policy offers "no relief to customers" from what it calls the "Apple Tax".
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