Google Play Fees 🤖

We look at the lawsuits Google’s facing and policy changes the company’s recently made.

Google announced this week that they would be lowering its commissions on fees from apps downloaded from Google Play globally on in-app purchases and services, from 30% down to 15% on the first $1 million of revenue each year. The fee remains unchanged past the $1 million per year threshold.

How many apps does that cover? On the surface, a lot. 99% of developers, Google estimates, will have a 50% reduction in fees (they make less than $1 million a year). But looking at the fine print, 97% of apps globally do not sell digital goods or pay any service fee, so this policy doesn’t even impact most apps to begin with. Google, last year, brought in revenues of almost $40 billion from the Play Store.

This policy change is similar, but somewhat different from Apple’s policy changes on their own app store last year, For Apple, app fees dropped from 30% to 15% only if an app stayed under a $1 million per year threshold the whole year.

We wrote a newsletter last year about Epic Games’ stand against Apple and Google, first allowing players to pay them directly and then getting kicked off the app stores. Epic Games launched a lawsuit and publicity campaign against the tech giants and is still unavailable through their platforms.

So why is Google making this choice now? Perhaps it’s hearing feedback from apps about how they’re still trying to make their costs align, even if they’re making $1 million+ a year. Perhaps it’s because in India, startups sought to form an alliance and alternative to Google Play.

Or perhaps Google’s feeling the heat on three major lawsuits the government has started against it.

• The first, from the DoJ, is suing Google for paying Apple to be the only default search on iOS devices.
• The second, from Texas states that Google and Facebook colluded to halt Facebook from competing with Google.
• And the third from a coalition of states alleges Google ties its search advertising product with other advertising tools to leverage more market power, and that Google abuses its position in search to preference itself over other services (like Yelp, for instance).

Perhaps moves like this are just the PR Google needs to alleviate some of the pressure they might face legally in the coming years. Google also recently announced that third-party cookies are a thing of the past on its ad networks and Chrome browser. Fortunately for Google, it has lots of access to first-party data so it is unlikely to be impacted by its own policy change, like other businesses will be.

Further reading:

As a consumer:

• Check out The Attention Merchants: The Epic Scramble to Get Inside Our Heads by Tim Wu for more about advertising, including from folks like Google

As an investor:

• Last year, there were shareholder proposals seeking details on what content the Alphabet (Google’s parent company) removes in response to government requests. We are keeping an eye out for any additional related shareholder proposals this year.

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