Google to slash app store fees by half for developers’ first US$1m in sales

Google will slash the fee it takes from Android app developers in the Google Play store by half following a similar move by Apple last year, as the two companies face legal challenges over the fees.

The company announced the move, which will take effect from July, in a blog post on Tuesday. The amount taken from purchases of apps, or in-app purchases, on the Google Play store will be cut from 30% to 15% for the first US$1m (A$1.3m) of revenue that developers earn each year.

Google’s vice president of product management, Sameer Samat, said this would mean 99% of developers globally would see a 50% reduction in fees.

“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,” he said.

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The fee goes back to 30% after the first $1m, and Samat said applying it to all app developers – not just the developers making less than $1m per year was a “fair approach”.

“Android and Google Play have always listened to our developer partners from around the world and we continue to take their input into account as we build and run the ecosystem,” he said.

Apple brought in a similar cut to its fees for the Apple App store in January this year.

Both companies are facing legal action from Epic Games, the creators of Fortnite, after Fortnite was kicked off both the Apple App Store and Google Play Store in August last year because it was bypassing the companies’ in-app payment methods in favour of its own cheaper direct billing that prevented Apple and Google taking a share.

In response to the announcement, an Epic Games spokeswoman said the reduction might “alleviate a small part of the financial burden developers have been shouldering” but said it did not address the root of the issue.

“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,” she said.

“Competition in payment processing and app distribution is the only path to a fair app marketplace.”

Epic has alleged Google and Apple have harmed app developers and consumers in Australia by restricting competition and innovation through preventing choice over app distribution on iPhones and Android devices and in-app payments.

Google declined to comment on the court case.

In August, an Apple spokesperson said Epic’s actions in seeking to bypass the in-app purchasing system were expressly about violating App Store guidelines designed to protect customers.

“Their reckless behaviour made pawns of customers, and we look forward to making this clear to Australian courts,” she said.

Epic has since launched legal action in the US, the UK and Australia, and has filed an antitrust complaint against Apple in the EU.

Both cases will be heard in the Australian federal court next week, with the US case due to be heard in May.