After widespread pushback from developers, tech giant Google has decided to reduce Play Store commission for apps that offer subscription services. The company said that instead of charging a 30% fee for subscription payments made through Google’s built-in payments services, the company will drop the commission to 15%.
“Digital subscriptions have become one of the fastest growing models for developers but we know that subscription businesses face specific challenges in customer acquisition and retention,” the company said in a blog post. “To help support the specific needs of developers offering subscriptions, starting on January 1, 2022, we're decreasing the service fee for all subscriptions on Google Play from 30% to 15%, starting from day one,” the post added.
The tech giant requires developers using the Google Play store to use its own built-in payments services, and pay a 30% commission for in-app purchases, including selling digital items and subscription services. Last year, Google had announced a program for small businesses, under which it reduced this fee to 15% for apps that make less than $1 million off its platform. The company said that this program led 99% of developers to qualify for a 15% service fee.
The tech giant has faced widespread pushback from developers in India for its payments policies. Last year, the company said Indian developers will get till March 31, 2022 till developers are forced to use Google payments or be kicked off the Play Store. Despite that, developers approached the Competition Commission of India (CCI) last year against the policy, which in turn ordered its Director General to conduct a probe into Google on these policies.
Last month, a startup body called the Alliance of Digital India Foundation (ADIF), requested the CCI to provide interim relief and stop Google from bringing the policy into play till the probe finishes.
“ADIF foresees that barring an order passed by CCI to maintain status quo until the completion of the ongoing inquiry, Google shall proceed to enforce its terms on the Play Store, thereby leading to adverse and irreversible consequences on India’s fledgling startup ecosystem," said Sijo Kuruvilla George, executive director, ADIF at the time.
While today’s move by Google may be beneficial for many startups, it’s not quite in line with what they have been asking. The central request from these companies is that companies like Google should allow them to use third party payments services as well as their own, something that the company hasn’t yet allowed.
On the contrary, fellow American giant Apple signed deals with the Japanese Fair Trade Commission (JFTC) in September, under which it will allow subscription services to use external payments links on their apps. While Apple will still charge 30% for its using its built-in payments tools, adding third party links could allow these developers to by-pass these tools. The change applies to so-called reader apps, which includes subscription services like Netflix, Amazon Prime etc. and newspaper firms.
Apple also faced a similar case in India. A little known non-profit called Together We Fight Society filed an information with the CCI opposing the 30% commission charged by Apple.