Google cuts commissions for subscription services to 15%, ‘as low as’ 10% for media apps

Google will cut its app store fees for all subscription-related apps to a maximum of 15% from day one as opposed to the current 30%, the company announced on Thursday amid rising regulatory scrutiny of its and Apple’s app store practices. 

For e-books and on-demand music streaming services like Spotify, Google is cutting its commission to “as low as 10%”, the company said. Currently signing up for a Spotify subscription from within the app directs users to Spotify’s website to carry out the transaction in order to bypass the commission. 

These changes will come into effect in January next year.

Google says that it is making these changes for ebooks and music streaming apps since “content costs account for the majority of sales” and that the rates “recognise industry economics of media content verticals.”

However, the change also comes amid growing regulatory scrutiny at a global level in Google’s app store practices. 

Google’s announcement is expected to mount pressure on Apple which, like Google, has widely been criticised for charging a 30% commission on all in-app purchases. 

So far, Google’s commission dropped from 30% to 15% after 12 months of a recurring subscription. With the latest announcement, the company will charge 15% commission starting from day one. 

Google already has a policy where the first million dollars a developer earns through Google requires a 15% cut.

Earlier this month, the startup body Alliance of Digital India Foundation had moved India’s competition watchdog seeking interim relief from Google’s policy on collecting commission on payments made on apps on its play store, until an ongoing antitrust investigation into the big tech giant was completed.

The Competition Commission of India has reportedly also found Google abusing its dominance in the Android phone market.

One thing to note here is that this policy change applies only to subscription-based apps but not to gaming apps. On that front, Google is currently locked in a legal battle with Epic Games, the maker of Fortnite, over its in-app payments mechanism. 

Google’s announcement also comes just a week before its annual developer summit.