Google to cut Play Store fees for subscription-based apps next year

Google said it plans to lower the commission it collects from subscription-based apps to 15% from 30% on Google Play starting next year. The announcement comes following criticism from regulators and app developers over its fee structure.

In a blog post on Thursday, Google said it has made key changes, including moving from a one-size-fits-all service fee model to "multiple programs designed to support and encourage our diverse app ecosystem." The new structure will go into effect on Jan. 1 next year.

This latest concession comes after Google reduced its commission to 15% from 30% for the first million dollars in revenue earned by app developers from sales on the Google Play store per year. Those changes were made in March, and followed Apple, which had made a similar move  last November with its rival app store. 

Ebooks and on-demand music streaming services will also get a lowered service fee of 10%. But the biggest games won't benefit from the latest policy change as they tend to rely on in-app purchases as opposed to subscriptions. Instead, gaming apps will be subject to the 15% commission for the first $1 million earned then be subject to a 30% commission. 

Companies that develop apps for Google's Play store welcomed the news.

"The pricing change they've announced will allow us to better invest in our products and further empower users to confidently connect online," said Whitney Wolfe Herd, the founder and CEO, Bumble Inc.

"This is great news!" said Luis von Ahn, co-founder and CEO of Duolingo. "This reduction in subscription fees will help Duolingo accelerate our mission of providing universally available education."

According to analytics firm Sensor Tower, Google collected $11.6 billion in in-app purchases globally in 2020 from Google Play store spending of $38.8 billion.