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Google Cuts App Store Fees Amid Antitrust Scrutiny

The tech giant will cut fees for low-earning app developers in half as it faces lawsuits and regulatory scrutiny over its dominance in the Android app store market.

SAN FRANCISCO (CN) --- Google will cut fees it charges app developers to 15% for the first $1 million they earn each year starting July 1, following a similar move by Apple as both tech giants face criticism and lawsuits over their dominance in the app store market.

“We believe this is a fair approach that aligns with Google’s broader mission to help all developers succeed,” Google vice president of product management Sameer Samat wrote in a blog post Tuesday.

Like Apple, Google had been taking a 30% commission on all app purchases through its Google Play app store. Google will continue to take a 30% cut after the first $1 million in sales. The revenue comes from fees charged for app downloads and in-app purchases.

Google says 99% of developers who distribute apps through its Google Play store will see their fees cut in half as a result of the change.

“These are funds that can help developers scale up at a critical phase of their growth by hiring more engineers, adding to their marketing staff, increasing server capacity, and more,” Samat said.

Google’s decision follows an announcement by Apple this past November to cut its fees from 30% to 15% for the first $1 million earned by each app developer. Unlike Google, Apple will only offer the 15% rate to developers who make less than $1 million in one year, instead of offering a 15% discount to all developers for the first $1 million earned each year.

The fee reductions come as both companies face criticism, litigation and regulatory scrutiny over their dominance in the app store market.

Over the last two years, consumers and app developers have hit Google and Apple with antitrust class actions, claiming their monopolistic control of the market has allowed them to charge 30% fees and set an anticompetitive 99-cent minimum for all app purchases. They claim the fees and pricing would be more competitive if they had more choices in how apps are downloaded and distributed.

Apple only allows users to download apps through its app store. Android users can get apps through non-Google Play stores, but critics say the process of going around the Google Play store puts them at a disadvantage.

Last year, Epic Games, maker of the popular video game Fortnite, sued Apple and Google on antitrust claims. Both tech giants had kicked the video game off its stores after Epic Games introduced a new feature that allowed users to bypass Google and Apple’s payment processing systems and pay Epic Games directly.

This past October, a federal judge in Oakland refused to make Apple reintroduce the game to its app store, finding Epic Games breached its contract with Apple by introducing its own in-app payment system without permission.

Android users can still download Fortnite through a manual installation process known as sideloading, but the video game maker argues the multi-step process is complex, confusing and requires users to manually approve each update.

In a statement Tuesday, Epic Games said Google’s new rates for lower-earning app developers does not address the core problem with its app store.

“While a reduction in the Google app tax may alleviate a small part of the financial burden developers have been shouldering, this does not address the root of the issue,” Epic Games said in an emailed statement. “Whether it’s 15% or 30%, for apps obtained through the Google Play Store, developers are forced to use Google’s in-app payment services.”

State lawmakers have also been considering bills that would impose new regulations on app stores. Last month, North Dakota senators voted against a proposal that would have forced app stores to let developers use their own payment processing software to bypass fees charged by Apple and Google. This month, the Arizona House of Representatives advanced a similar piece of legislation.

Follow @NicholasIovino
Categories / Business, Technology

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