Google to lower commission for app developers, following complaints

Google will lower its planned commission rate for app developers, following complaints from software makers over steep fees.
Google South KoreaGoogle in a blog post said it will levy a 15 percent commission on in-app purchases to all developers for annual sales up to $1 million and take a 30 percent commission from revenues over the $1 million mark.

The new policy will take effect in July.

A company official said 99 percent of developers log less than $1 million annual revenue on the Play store, reports Yonhap news agency.

Google earlier announced a plan to introduce the 30 percent commission to all in-app digital goods purchases in South Korea while making it mandatory to use its own payment system for app purchases on its platform, starting January 2021.

The new billing policy caused fierce opposition from tech firms and politicians and the company later delayed its implementation to September.

Last year lawmakers proposed bills that would ban app market operators from imposing certain payment methods in mobile content transactions.

The tech giant has said that the service fee is crucial to reinvest in its platform.

“We will do our best so that South Korean developers can provide their products and services to over 1 billion users from some 300 countries around the world and achieve success in the global market,” a Google official said.

Sales from apps on Google’s Play store last year were estimated at over 5 trillion won or $4.4 billion, according to a government report that reviewed 246 companies that accounted for over 75 percent of the country’s mobile app sales during September and October last year.

Google and Apple have come under fire from large firms such as Microsoft Corp, Spotify Technology SA, as well as startups and smaller companies, that allege the fees deprive consumers of choices and push up app prices.

In contrast, Apple said in November it planned to lower its commissions only for developers who make $1 million or less in proceeds in a year from its app store.

Fortnite creator Epic Games said in a statement to Reuters that Google’s move only alleviates some of the financial burden of developers.

“Whether it’s 15 percent or 30 percent, for apps obtained through the Google Play Store, developers are forced to use Google’s in-app payment services,” Epic said.

Epic has been at loggerheads with Apple since August when the game maker tried to avoid paying fees on the iPhone maker’s app store by launching its own in-app payment system, which prompted Apple to ban Fortnite from its store.

Data analytics firm Sensor Tower estimated that it could have cost Google about $587 million — or about 5 percent of the $11.6 billion it earned from Google Play last year — had the service fee cut come into effect in 2020.