Google Will Cut App Store Fees for Subscriptions to 15% From Day One
Google Play, the internet giant’s Android app store, will reduce the fee it charges developers who sell subscriptions to 15%, starting when customers sign up for a recurring service plan. The change takes effect Jan. 1, 2022.
Currently, Google Play — like Apple’s App Store — charges apps with subscriptions 30% in the first year, then drops to 15% after 12 months. However, “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,” Sameer Samat, VP of product management for Android and Google Play, wrote in a blog post announcing the fee change.
“Digital subscriptions have become one of the fastest growing models for developers but we know that subscription businesses face specific challenges in customer acquisition and retention,” Samat added.
Companies including Netflix and Spotify currently don’t let users pay for subscriptions through Apple’s App Store or Google Play, because of the fees the app stores charge. It’s not clear whether the Google Play fee change to 15% out of the gate will convince the likes of Netflix or Spotify to change the status quo, though.
In addition, Google Play is reducing the service fee for on-demand music streaming services and ebooks, which will now be eligible for a service fee as low as 10%. “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 wrote.
In a statement provided by Google, Bumble founder/CEO Whitney Wolfe Herd said, “The pricing change they’ve announced will allow us to better invest in our products and further empower users to confidently connect online.” The internet company also provided a quote from Duolingo CEO Luis von Ahn, who said, “We’re excited to see Google continuing to collaborate with the ecosystem to find models that work for both the developer and platform. This reduction in subscription fees will help Duolingo accelerate our mission of universally available language learning.”
According to Google, 97% of developers distribute their apps on Google Play for free. For developers that offer paid apps or offer in-app purchases, the flat service fee has been 30%. Apple charges the same standard “app tax” for its App Store.
Both Google and Apple have faced growing calls from app makers like Spotify to adopt fairer terms for their app stores, while “Fortnite” developer Epic Games has sued both tech giants alleging their app stores represent illegal monopolies. (The ruling in the Apple case was largely in Apple’s favor, though Epic is now appealing the decision .) In addition, U.S. lawmakers have introduced legislation aimed at curbing the app stores’ power. This summer, 36 U.S. state attorneys general sued Google, alleging the company’s Google Play store abused its dominant market position. (Google called the state AGs’ antitrust suit “meritless” and said Google Play is “a system that provides more openness and choice than others.”)
Earlier this year, Google reduced its standard fee for all developers who earn less than $1 million on app purchases to 15% (following Apple’s move to do the same ). Critics dismissed those as PR moves that didn’t address the virtual duopoly the two companies hold on app distribution.