Google Inc. will cut its Play Store billing fee globally to 15% from a flat 30% for the first $1 million clocked by a developer, annually, for in-app purchases of digital goods.
Google Play’s billing system is applicable to app developers who sell digital goods and services on Google’s Play Store.
According to a Google India spokesperson, the decision was made in response to the demands and challenges faced by Indian developers who have been protesting against the company’s Play billing system.
Domestic payments platform Paytm, among the leading protesters, described the move as “absolute hogwash” and an attempt to divert attention.
Google clarified last year that close to 97% of its global developer base do not sell any digital goods and services in-app; hence, its Play billing system is applicable to only 3% of developers.
“With this change, 99% of developers globally that sell digital goods and services with Play will 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,” Google said in a blog post announcing the development.
In addition, the reduced commission will be applicable to the first $1 million earned by a developer each year, with the reduced fees renewed annually.
The revised commission will also be applicable to new developers coming on the Google Pay platform.
Google defines digital goods as virtual currencies, additional playtime bought by users on an app.
Apps charging for ad-free versions or data storage services are also counted as buying digital goods, Google said.
“We’ve heard from our partners making $2 million, $5 million and even $10 million a year that their services are still on a path to self-sustaining orbit. This is why we are making this reduced fee on the first $1 million of total revenue earned each year available to every Play developer that uses the Play billing system, regardless of size. We believe that this is a fair approach that aligns with Google’s broader mission to help all developers succeed,” the tech giant said.
In November, Apple reduced iOS developer app commissions to 15% for small developers earning less than $1 million from January this year.
Facing a backlash from developers, Google in November delayed the enforcement of commission on in-app purchases until March-end 2022. It had held a meeting with Indian developers in October.
“The enforcement timeline for non-compliant Indian developers, which sell digital goods to use the Play billing system will continue to be until March 2022,” said a Google India spokesperson.
Indian startups strongly protested against Google’s in-app commission regime, calling it arbitrary.
Startups approached market watchdog Competition Commission of India (CCI) in October, and held talks on Google’s policies around the Play billing system.
In this regard, a letter was also expected to be sent to CCI and the ministry of electronics and information technology by Indian startups.
“It is absolute hogwash on the big issue of how Google is taking the money from the Indian app industry altogether, and this is an attempt to divert attention. Digital-native companies have millions of dollars of revenues and they continue to pay 30%, which is way exorbitant and are not allowed to use even our own payment platforms. Google’s tax of 30% is effectively all the margin any technology company in India can ever make,” Paytm said on Tuesday evening, reacting to Google’s announcement.