Google’s Indian Move May Force Apple to Cut App Fee

Google’s move to slash the fees it collects from Indian downloads of its subscription-based Play Store, has been condemned as “half-hearted” by local app developers – however, the move will certainly put pressure on Apple to toe the line, experts say.

Up until now both Google and Apple have charged app developers a 30% commission for “customer discovery” and hosting apps from their online outlets – Play Store and App Store, respectively.

Digital subscriptions have become one of the fastest growing models for developers but subscription businesses face challenges in customer acquisition and retention, Google vice president for product management, Sameer Samat, said in an official blog.

Customer churn makes it challenging for subscription businesses to benefit from that reduced rate, Samat said, so the tech giant had decided to simplify things from January 1, 2022, by slashing the service fee for all subscriptions on Google Play from 30% to 15%.

“The announcement is a right step forward since the reduction will improve app developers’ margins and will simplify processes to some extent – should they fall into the ‘right’ categories,” said Sijo Kuruvilla George, executive director of the Alliance of Digital India Foundation. ADIF is a New Delhi-based think tank for India’s digital start-ups that aims to build an open, fair, neutral, and self-reliant technology ecosystem.

“But more importantly it will also put pressure on Apple to toe the line and slash its high commissions too,” he said.

While Google has always charged a 30% commission, its only real competitor in the industry, Apple, charges a 30% fee for subscription services for the first year and 15% for each year thereafter. But Apple makes an exception for apps with revenue below $1 million, only taking a 15% cut from the jump.

“The whole app economy globally – barring China and Iran to some extent – is predominantly dominated by Google and Apple. Any policy change by a platform therefore, would put pressure on the other to follow suit, because app users will expect it,” George said.

‘Half-Hearted’ Measure

Still, Google’s move is “half-hearted”, ADIF says, because while slashing the fee, Google has also adopted a layered pricing system for subscription and renewals of apps, which the Alliance claims is “unfair and arbitrary”.

And both the app heavyweights continue to force developers to adopt only their payment platforms, it said.

“Both Google and Apple have also enforced that starting March 2022, the payment of all app downloads must be processed through their respective payment processing system solely – and not through any third-party system like a credit card – giving rise to another type of anti-trust challenge,” George said.

Google’s announcement did nothing to address the issues and challenges of scores of developers affected by the company’s earlier announcement that they must adopt the tech giant’s billing system by March 2022.

ADIF said that, app developers also face increased complexity in terms of integration and repeat-onboarding of customers, while almost all of them would see their margins thinning because of migration to a much higher commission rate (of 30% or 15%) from the present rates (1%-2%) levied by existing third-party payment providers.

Nevertheless, the good news, he said, was that Google’s move on Thursday, “points to an admission of guilt and unfairness on Google’s part in their Play Store policies.”

“What developers are asking for is fairness and not benevolence in the form of reduced commission percentages. The developer community now urges Google to pay heed to the concerns of all developers, and not just the ones already on their billing system,” George said.

• By Indrajit Basu