Google is reducing the prices it charges for subscription services in its app store in response to pressure from developers and lawmakers. According to the company statement, Google Play Store will begin charging a 15% commission to third-party subscription apps from Jan. 1, a 50% slash in the charges. Previously, subscription applications were charged 30% for the first year and 15% thereafter.
Additionally, Google charges a 15% fee on the first $1 million in income. Google stated that it is making these changes because “customer attrition makes it difficult for subscription businesses to benefit” from a second-year discount. “While digital subscriptions have become one of the fastest-growing revenue streams for developers, we recognise that subscription businesses face unique customer acquisition and retention difficulties,” Sameer Samat, a Google vice president, wrote in a blog post.
This reduction is likely to boost developers and in-app purchases. On Thursday, shares of app developers such as Bumble, Duolingo, and Roblox increased after Google announced it would lessen its cut from subscriptions on its Android app store. India is among the firm's largest markets in terms of the user base, who have requested that the company allow for alternative payment options for customer purchases.
“While digital subscriptions have become one of the fastest-growing revenue streams for developers, we recognise that subscription businesses have unique client acquisition and retention issues. We've worked with our partners in dating, fitness, education, and other areas to understand the nuances of their companies,” Samat said.
“To assist developers selling subscriptions, beginning January 1, 2022, we're reducing the service cost for all subscriptions on Google Play from 30% to 15%, effective immediately,” he said.
Additionally, Google announced a 10% service charge reduction in the media experience programme in categories such as ebooks and on-demand music streaming services, where customers pay a monthly membership cost.
“Ebooks and on-demand music streaming services, which rely heavily on content prices, will now be eligible for service fees as low as 10%. The revised pricing takes into account the economics of verticals of media content and improves Google Play for developers and the communities of artists, musicians, and authors they represent. You can get additional details here,” Samat said.
Indian online entrepreneurs have taken a stand against Google and Apple over their in-app charges, claiming that the two technology giants prohibit the use of alternative payment mechanisms that offer minimal to no commissions, so damaging their businesses.
The Alliance of Digital India Foundation (ADIF) filed a petition with the Competition Commission of India (CCI) earlier this month seeking an injunction against Google's new Play Store policy, which takes effect in March 2022.
Google and Apple have both reduced fees in response to legislative and regulatory criticism over the dominating app stores' clout within their developer ecosystems. But this is the first blanket reduction of 50%. Apple also charges 15% for subscriptions after the first year but it has not lowered the cut from 30% in year one.