Enlarge /. The logo for Google's app and content marketplace Google Play.
Today, Google announced a major change to the structure for dividing the revenue of Google Play apps that could significantly change the fate of independent developers or small businesses that rely on the Android platform's app store.
Beginning July 1, Google will cut the first $ 1 million in annual Google Play revenue a developer makes by 15 percent. That is a decrease of 30 percent previously. The 30 percent figure continues to apply to all revenues above $ 1 million per year.
Google claims that 99 percent of developers with apps and content on Google Play will reduce the fees paid to Google by up to 50 percent.
On the surface, this seems like a very similar deal to what Apple announced late last year when it stated that developers making less than $ 1 million will soon be paying just 15 percent to the platform instead of the historic ones 30 percent. But it's actually different in ways that might be important to a lot of developers. it's probably a little more generous.
This is because Apple applies the lower 15 percent rate to a developer until that developer has more than $ 1 million in revenue in a given year. At that point, the higher 30 percent number will be applied to all of that developer's earnings. Google still charges 15 percent for that first million even if the developer makes $ 5 million. In Google's model, a developer who makes $ 1.2 million from an app pays 15 percent on $ 1 million, and then 30 percent on $ 200,000. At Apple, a developer spends $ 800,000 on forks that make up more than 15 percent of that amount. However, if he makes $ 1.2 million, he'll pay 30 percent for every $ 1.2 million, not just $ 200,000.
To that end, the author of Google's developer blog post (Product Management VP Sameer Samat) claims that developers bringing in $ 2, 5, and even $ 10 million each year have told Google that this change will make a difference around make their businesses more sustainable even though they make well over $ 1 million. After all, an additional 15 percent of $ 1 million is $ 150,000, which is no small amount of money for the largest and most successful companies.
However, this change is unlikely to be solely due to altruism. First, Google is almost exactly the same as Apple's offering to developers, as the App Store and Google Play compete directly with each other. Both Apple and Google have faced antitrust lawsuits and investigations over their problems in their respective app marketplaces. As with Apple with the App Store, Google requires app developers to use their own payment system for apps on Play, which makes it difficult to bypass these fees.
While the charges themselves aren't usually the main topic of investigations and lawsuits, this change improves the look and feel for the two tech giants while they are beset, and all without costing them huge amounts of money. The vast majority of the revenue Apple and Google generate from their app marketplaces comes from apps with annual sales well in excess of $ 1 million.