Starting July 1, Google has decided to cut its 30 percent Play Store billing fee by half for developers worldwide when they make the first $1 million of their annual revenue. Google also made it clear that apps selling digital goods on the Play Store have to use the platform’s billing system.

The billing system impact

By stating that developers will have to use Google’s billing system, the tech giant ensures that it gets a cut of the in-app purchase amounts as a fee of sorts. Google has arrived at the 15 percent figure months after it faced heat for a 30 percent billing policy.

When Google announced its plans for the 30 percent commission on transactions last year, several Indian start-ups and unicorns came forward and described it as the tech giant abusing its monopoly.

Google defended itself by explaining that the transaction fee was always a part of its policy. It had further justified its move by stating that only less than 3 percent of developers with apps on Play Store would be affected by the 30 percent commission since 97 percent of developers do not offer in-app purchases of digital goods. According to Google, “even of this 3 percent, the vast majority (nearly 97%) already use Google billing system”.

However, as criticism mounted, Google chose to extend its deadline by six months, giving Indian app developers time to comply with a new billing system.

What does the slash in fee mean?

Thanks to the new policy, developers will only be charged a 15 percent billing fee when they make the first $1 million of their annual revenue, the company said on Tuesday.

With the new policy in place, 99 percent of developers globally that sell digital goods and services with Play can enjoy a 50 percent fee reduction.

This fee slash, Sameer Samat, vice-president, Android and Google Play, stated in a blog post, will convert into funds that can help developers go big at a crucial stage of their growth by recruiting more engineers.

How will the discount be applied?

According to Samat, services of partners making $2 million, $5 million and even $10 million a year and more, were still on a path to self-sustaining orbit. He explained that this was why, irrespective of size, they were making this reduced fee on the first $1 million of collective revenue earned each year available to every Play developer.

The discount offered will be automatically renewed every year once developers provide some basic information to help Google understand any associated accounts that they may have, so that the 15 percent can be applied accordingly.

As announced previously, developers in India who sell digital goods and have not integrated with Play's billing system will have time to do so till March 31, 2022.

Where do Google’s competitors stand?

Fellow tech giant and competitor Apple had also announced a collection of 15 percent fee instead of 30 percent of App Store sales from companies making less than $1 million revenue on its platform from January 1, 2021, as part of a new Small Business Program.

So, in terms of a billing policy and commission rate, the alternatives don’t offer much reprieve to developers in India.

(Edited by : Abhishek Jha)