As Google faces increased scrutiny over its app store practices in India and across the world, the internet giant announced on Thursday that starting January 1, 2022, it will decrease the service fee for all subscriptions on Google Play from 30% to 15%, starting from day one. Currently, developers have to pay a 30% cut on subscriptions to Google for the first 12 months before the commission drops to 15%.
As per Sameer Samat, vice president, product management, Google, digital subscriptions have become one of the fastest growing models for developers but the subscription businesses face specific challenges in customer acquisition and retention. “We’ve worked with our partners in dating, fitness, education and other sectors to understand the nuances of their businesses. We’ve heard that customer churn makes it challenging for subscription businesses to benefit from that reduced rate. So, we’re simplifying things to ensure they can,” he stated, adding that 99% of developers qualify for a lower service fee.
Furthermore, the company announced that it is making changes to the service fee in the Media Experience program, to better accommodate differences in these categories. Businesses such as ebooks and on-demand music streaming services, where content costs account for the majority of sales, will now be eligible for a service fee as low as 10%. “The new rates recognise industry economics of media content verticals and make Google Play work better for developers and the communities of artists, musicians and authors they represent,” Samat highlighted. These are also businesses that, in some cases, compete directly with Google — as YouTube Music does with Spotify. Google had launched the Play Media Experience program earlier this year to encourage video, audio and book developers alike to help grow the Android platform by building amazing cross-device experiences.
Similar to Apple, Google is currently facing a probe from India’s antitrust body Competition Commission of India (CCI) over the issue of mandatory use of Google Play Store’s payment system for paid apps and in-app purchases. The commission is of the view that such a policy is unfair as it restricts the ability of app developers to select a payment processing system of their choice.
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