The latest blow to the mobile app economy's once-standard 30% cut is coming from an unlikely player: Google. The search giant on Thursday announced it would collect a lower fee from both subscription and music-streaming apps, reducing its standard cut from nearly a third of all digital transactions down to a flat 15% for eligible app categories.
To be clear, Google already allows subscription-based apps to keep 85% of revenue so long as a customer signs up through the Android app and stays subscribed for more than a year. That change was one Google made back in 2017 , following in Apple's footsteps as Google has been prone to do over the years with regard to managing its mobile app marketplace. Google also followed Apple in lowering app store fees earlier this year to 12% for small developers making less than $1 million per year.
But Google is now going a step further, and breaking from its tradition of only moving when Apple does, by establishing a new flat revenue split for certain apps on the Play Store. Google's official justification is that it has "heard that customer churn makes it challenging for subscription businesses to benefit from that reduced rate," so it's making it easier for developers that bill on a recurring basis to sign up customers within their app with more confidence they'll stick around.
Google says e-book apps and music-streaming apps may also be eligible for a fee as low as 10%, but that developers will have to review the new guidelines and work with Google to establish a new rate. "The new rates recognize industry economics of media content verticals and make Google Play work better for developers and the communities of artists, musicians and authors they represent," Google said. The company earlier this year established the 15% rate as part of a multi-platform initiative called Play Media Experience , so apps that met certain requirements like building complaint versions of software across the Wear OS and Android Auto platforms could enjoy the lower cut.
Of course, these changes aren't happening out of the goodness of Google's heart, but rather amid increasing regulatory pressure on Big Tech and mobile app stores in particular in the U.S. and abroad.
Both Apple and Google remain embroiled in lawsuits with Fortnite maker Epic Games over app store fees and restrictions, and the Epic v. Apple case, which went to trial in May, resulted in a verdict that would in theory make it easier for developers to bypass app store fees by transacting with customers directly. Apple and Epic have appealed the ruling and Apple, has asked to delay the court's order to change its rules around those so-called steering provisions, leaving court-ordered changes to the App Store off the table for now. Google's case with Epic has yet to go to trial.
Putting aside the Epic battle, there is yet more regulatory pressure on Big Tech and an especially intense focus on Google. That includes new legislation passed in South Korea earlier this year that, when enforced, will open the door for app developers to bypass both the App Store and Play Store directly using of in-app payment systems, as well as similar legislation since proposed by lawmakers in the U.S. Google is also at the center of a number of antitrust investigations in the U.S. related to the Play Store, its search engine and other parts of its sprawling business, all of which are likely influencing Google's decision today to lower its fees further.
"Google has a long history of evolving Android and Play's model based on feedback from our developer ecosystem on what they need to be successful on Play," a Google spokesperson told The Verge when asked about why it decided to lower its fees for certain apps.
Update Oct. 21, 2:15PM ET: Included more information from Google's official announcement post.