Google to Cut Commission It Charges App Developers

App developers have complained about the amount of money that Google and other large tech companies are able to siphon off in sales.

Photo: Mark Lennihan/Associated Press

Alphabet Inc. GOOG 1.21% ’s Google is reducing the commission it charges developers that sell digital goods and services through its Play store, a move that comes amid increased regulatory scrutiny of the power tech giants wield through their app marketplaces.

The company behind the world’s largest operating system, Android, said Tuesday that it would reduce service fee it collects from 30% to 15% on the first $1 million developers earn from its app store. The reduction is a slight departure from Apple Inc. AAPL 0.93% ’s decision late last year to reduce its rate to 15% for software makers who generate less than $1 million in annual sales.

Google and Apple have built multibillion-dollar digital empires over the past decade by becoming the primary gatekeepers for apps that are downloaded to smartphones and other mobile devices world-wide. Their position of power has drawn criticism from developers large and small over the amount of money that tech companies are able to siphon from them. Those complaints have triggered lawsuits as well as regulatory probes in multiple countries.

By reducing its take of app sales, Google estimates that 99% of developers would see their fees cut in half. It said that every developer, regardless of size, is eligible to benefit, adding in a blog post that it considered the reduction to be “a fair approach that aligns our success with that of our developer ecosystem.”

Apple and Google have one of Silicon Valley’s most famous rivalries, but behind the scenes they maintain a deal worth $8 billion to $12 billion a year according to a U.S. Department of Justice lawsuit. Here’s how they came to depend on each other. Photo illustration: Jaden Urbi

The debate over app-store fees intensified last year after Epic Games Inc., maker of the hit videogame “Fortnite,” launched a public campaign against Google and Apple after implementing a payment system that collected money from players without forking over the typical 30% cut to the app-store owners. Google and Apple retaliated by kicking “Fortnite” out of their stores, an action that led Epic to file an antitrust lawsuit.

Apple declined to comment on Google’s change. Epic didn’t immediately respond to a request for comment on the matter.

Write to Tripp Mickle at Tripp.Mickle@wsj.com

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Source

Leave a Reply