In an effort to help app developers create a more sustainable business, Google said it will be slashing its commission on the Play Store for in-app digital products.
The move follows a similar announcement by rival Apple.
As of July 1st, 2021, Google will be reducing its service fee from 30% to 15% for the first $1 million in revenues.
A 30% cut applies to each dollar earned above the first $1 million.
The changes are a boon to smaller developers who don’t earn as much in revenue as larger app makers.
It will apply to some 99% of developers selling services through their app on the Play Store.
In a blog post, the company said:
“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.”
Google also added that scaling an app didn’t stop at the $1 million mark.
“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. 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.”
The changes follow a backlash in India where many tech and app start-ups said they were struggling with the 30% fees.
However, the move has been dismissed by some as not being good enough.
“While a reduction in the Google app tax may alleviate a small part of the financial burden developers have been shouldering, this does not address the root of the issue,” a representative of Epic Games wrote in a statement.
“Whether it’s 15% or 30%, for apps obtained through the Google Play Store, developers are forced to use Google’s in-app payment services. Android needs to be fully open to competition, with a genuinely level playing field among platform companies, app creators and service providers. Competition in payment processing and app distribution is the only path to a fair app marketplace.”