Google is halving the commissions it collects from developers on in-app purchases to 15%; however, this is only for the first $1 million of revenue in a year. The change, which seems to be aimed at bolstering Google’s image of being friendly to small businesses, will be applicable from July 1, 2021. Google claimed in a blog post that 99% of developers globally will see a 50% reduction in fees because of this change. Google’s main competitor Apple had announced a similar policy for App Store in November 2020.
How Google’s reduction in fees will work: Google said every developer that uses the Play billing system will be covered under the policy, even the ones that make millions of dollars every year. The company claimed that the fee reduction is being put in place to help developers spend more on hiring capacity, increasing server capacity and more during the early stages of their growth.
Once developers confirm some basic information to help us understand any associated accounts they have and ensure we apply the 15% properly, this discount will automatically renew each year. We look forward to sharing full details in the coming months,” Sameer Samat, vice president, Android and Google Play said in the blog post.
However, there are some caveats for Indian developers. Earlier in October 2020, Google had announced that it will start mandating the use of the Play billing system — thereby, the payment of 30% commission to Google — on Indian developers only from March 31, 2022. These developers would continue to have till then to integrate their apps with the billing system, while those that have already integrated them can start receiving the benefit from July 2021.
Google’s deferment was a result of widespread backlash from Indian startups, which were upset about the 30% “tax”. They had accused Google of abusing its dominance in India. The deferment, however, did not stop the Competition Commission of India (CCI) from opening an antitrust investigation into Google’s payment policies. The reduction in fees will possibly help put Google in a better light with the CCI, not to mention encourage small businesses to integrate the Play billing system way earlier than the March 2022 deadline.
How Google’s policy differs from Apple’s: Apple too had halved the the commission to 15% for small developers, but the policy works quite differently. A developer can avail the reduction as long as their revenue from all of their apps on the App Store make less than $1 million in revenue in a calendar year. Once they cross the $1 million threshold, the normal 30% rate would start applying to them from then on; if their revenues drop below threshold in a future calendar year, they can only qualify for the reduced fees the year after.
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