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Google Halves App Store Fees, Following Similar Apple Move

Alphabet Inc.’s Google is halving the percentage it takes from developers on sales through its Google Play store, following a similar move by rival Apple Inc. last year.

The Mountain View, California-based internet giant said it is reducing the fees to 15% from 30% for the first $1 million in revenue on sales of apps and in-app-purchases each year. After the first $1 million, developers will pay the typical 30% fee.

The program differs from Apple’s approach. The iPhone maker limits its fee reduction to smaller developers who made up to $1 million in the previous calendar year.

“Scaling an app doesn’t stop once a partner has reached $1M in revenue — we’ve heard from our partners making $2M, $5M and even $10M a year that their services are still on a path to self-sustaining orbit,” Google said in a blog post. “This is why we are making this reduced fee on the first $1M of total revenue earned each year available to every Play developer, regardless of size.”

Google and Apple are a duopoly dominating the app economy of the Western world. The companies have come under intense pressure from regulators and some developers who complain that high app store fees and complex rules are raising costs for consumers. A total of $143 billion was spent on mobile app stores in 2020, a 20% jump from the previous year, according to analytics firm App Annie.

In December, Bloomberg News reported that at least three U.S. states were investigating the fees Google charges developers and were preparing to file an antitrust lawsuit as early as this year. The European Union and U.K. authorities are investigating Apple’s App Store.

Google also said 99% of developers will pay the 15% fee as only 1% of developers generate more than $1 million in revenue. The company also said only 3% of developers charge for their apps and services.

Developers must enroll in the program, but after that it will automatically renew each year. It launches on July 1, Google said. The company said the savings can help developers hire more engineers and further invest in their app development businesses. But the changes also potentially help Google avert antitrust scrutiny from regulators.

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