Google continues to let go of the ballast and waives its 30% commission on subscriptions. The Mountain View firm will soon lower the tax levied by its application store to 15%, from day one. A commission reduced to 10% will also emerge for certain services.
The discontent of developers and pressure from regulators are pushing the digital giants to give up ballast. Like the Apple App Store, the Google Play Store has been under fire for several months due to the existence of the famous 30% commission. Denounced by many publishers such as Epic or Spotify, the tax levied by Google is in the sights of several anti-competitive entities. A situation that has just pushed the Californian group to change its economic model “To meet the needs of developers”.
As of January 1, 2022, Google announces that subscriptions will be taxed at 15% from day one. Until now, the service charges levied by the Mountain View firm on subscriptions amounted to 30% the first year, and 15% thereafter. “For developers offering subscriptions, this means the first year subscription fee will be cut in half”, said Sameer Samat, vice president of Android, in a press release. The latter ensures that several Google partners have reacted positively to this announcement. He adds that his company will also be implementing a new tax at the reduced rate of 10%.
Digital reading platforms (ebooks) and music streaming services will see their commissions drop to 10%. To benefit from this reduced tax, developers must participate in the Media Experience Program and meet certain requirements such as offering their applications on several platforms of the American giant (Android, Google TV, Cast, Wear OS, Android Auto, etc.). Already available, this program has so far charged a 15% service charge for all applicable revenues.
Google is increasing the concessions
Like its competitor Apple, Google has been making a series of gestures aimed at developers for a few months. This summer, the internet search giant was already offering a commission reduced by 15% up to the first million dollars released. Google has chosen to align itself with Apple, which also lowered its commission for small developers at the start of the year. With these strong measures, these two giants – who share the market for mobile operating systems (Android and iOS) and the distribution of applications – are trying to ease tensions with developers. Many publishers are regularly heard, often accusing the two digital colossi of monopoly practices.
Google says 99% of developers are eligible for a reduced commission rate of 15% or less. © Google
In its press release, Google also seeks to prove its goodwill. The company looks back on the beginnings of Android and Google Play, recalling that the “The vast majority of developers could distribute their applications for free” on the Play Store and that they have never been taxed. Currently, 97% of publishers “Do it for free”, according to Google, which uses arguments similar to those used by its big competitor Apple. While the Cupertino company believes that its App Store has participated in the success of services like Spotify, the Mountain View giant ensures that its model including a 30% tax “Enabled applications to become one of the fastest growing segments”. “Instead of charging a license fee for our operating system, our service fees have allowed us to continually invest in Android and Play while making them available to device manufacturers around the world free of charge.”, estimates the Californian company behind the new Pixel 6 and Pixel 6 pro.
Applications and games are not affected by this measure
Google now estimates that 99% of developers can earn a commission of 15% or less, but in-app purchases from apps or games are not affected. A choice far from trivial since the lawsuit between Apple and the publisher Epic Games highlighted that video games were among the most lucrative applications on the App Store. The latter will remain taxed at 30% and this should allow the Play Store to retain equivalent income. It is therefore not certain that these recent efforts are enough to calm the industry while Apple could follow Google’s lead and align by lowering its commission on subscriptions in the months to come.