politics

Google Slashes Service Fees in Its App Store After Similar Move by Apple

CNBC

Sundar Pichai, Google testifies at congressional hearing, March 25, 2021.

  • Google said it's lowering service fees in its app store after a similar move by Apple.
  • Both companies have faced pressure to make their app stores more accessible to developers as lawmakers weigh new rules that could overhaul their business models.
  • Google said in a press release that it would cut the service fee for subscriptions on its Google Play store from 30% to 15% from day one.

Google said on Thursday that it's lowering service fees in its app store after a similar move by Apple, as both companies face pressure from lawmakers and regulators to make their mobile stores more accessible to developers.

The service fee for subscriptions in the Google Play store will drop from 30% to 15% from day one, Google said in a press release. Under the current model, developers must pay a 30% cut on subscriptions to Google for the first 12 months before the commission drops to 15%.

Google said 99% of developers would qualify for the lower service fee.

The company also said on Thursday that it's introducing a program to allow e-books, music streaming services, and other apps that pay for content to access fees as low as 10%. Apple doesn't make exceptions for those kinds of apps and doesn't offer a 10% fee to developers in its app store.

Apple, which has received more regulator attention over its app store than Google, over the past two years cut its take from 30% to 15% in many cases, including for apps making less than $1 million per year, news apps, and certain premium video streamers that participate in an Apple program. But Apple still charges 30% for the first year of a subscription, meaning that Google's app store may be more competitive for subscription-based apps.

Google and Apple have both faced legal action over their app store practices. In July, state attorneys general announced an antitrust lawsuit against Google, alleging the company abused its power over app developers through its Play Store on Android. And Fortnite maker Epic Games brought a major lawsuit against both Apple and Google centered around their app store fees and other practices.

Lawmakers have proposed a series of bills that could force Apple and Google to make even more lasting changes to their app store policies. The Open App Markets Act, for example, is a bipartisan bill that would force the companies' app stores to let developers use other payment systems, potentially helping them opt out of default service fees.

It would also prevent the platforms from keeping app makers from communicating directly with their users about "legitimate business offers" or punishing them for using different pricing terms elsewhere.

Another bipartisan bill, the American Innovation and Choice Online Act, would prohibit the platforms from using their gatekeeper power to discriminate against users or businesses, including app makers, that rely on their services, such as for distribution on mobile phones.

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