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Business News Digital
Google cuts its commission for in-app subscription fees
By Chris Cooke | Published on Friday 22 October 2021
Google has announced changes to its app store commissions, which will see it charge subscription services that take transactions through their Android apps 15% on all income. Currently it charges 30% on first year subscription monies.
The commissions charged by the Apple and Google app stores – and accompanying app store rules – have been controversial for years, of course, but are now increasingly subject to litigation and regulatory investigations. As a result, both the tech giants have started making some concessions.
Spotify – which directly competes with Apple Music and Google’s YouTube Music – has been particularly vocal on all this, of course, it accusing its bigger rivals of anti-competitive behaviour.
Although it has mainly welcomed the recent concessions, ultimately Spotify wants to be able to totally circumvent the Apple and Google transaction systems within its apps, thus avoiding paying any commissions at all. Which means Google’s latest announcement probably isn’t a huge help to the likes of Spotify.
It will, however, help plenty of other app makers. Currently Google – like Apple – charges a 30% commission on in-app subscriptions for the first year, which then drops to 15% after the first twelve months. From next year, it will charge 15% across the board.
In a blog post yesterday, Google’s VP Product Management, Sameer Samat, stated: “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. We’ve worked with our partners in dating, fitness, education and other sectors to understand the nuances of their businesses”.
“Our current service fee drops from 30% to 15% after twelve months of a recurring subscription”, he added. “But 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. To help support the specific needs of developers offering subscriptions, starting on 1 Jan 2022, we’re decreasing the service fee for all subscriptions on Google Play from 30% to 15%, starting from day one. For developers offering subscriptions, this means that first-year subscription fees will be cut in half”.
