Google wrote in a blog post that it chose $1M USD as the threshold because “we’ve heard from our partners making $2M, $5M and even $10M a year that their services are still on a path to self-sustaining orbit.”
The latest move from Google follows the footsteps of Apple. In late 2020, the Cupertino giant reduced its 30% App Store commission to 15% under its Small Business Program.
Google’s reduced commission will come into effect starting July 1, 2021. According to the company, 99% of developers will benefit from this move. “With this change, 99% of developers globally that sell digital goods and services with Play will see a 50% reduction in fees. 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,” wrote Google.
The whole reduce-the-fee movement started with the Apple-Epic Games fiasco where Fortnite was banned from the App Store in August, 2020. Further, Apple just terminated Epics Developer Account, to which Epic responded by taking it up the legal way. Apple also had spats with Facebook, Microsoft, and WordPress who accused Apple of forcing to add in-app purchases in some way or the other.
Interestingly, Google’s fee cut comes after it doubled-down on its 30% commission in September last year. It announced that apps submitted this year will have to rely on Google Play Store’s native billing system for in-app payments. As a result, it would ensure that Google gets its cut of 30% for purchases made via apps downloaded from the Play Store. However, that fee is now being halved for most developers.