Google is beginning to lower fees in its app store Play Store and introduce new payment options, fulfilling a settlement agreement with Epic Games.
Google has been engaged in a legal battle with Epic Games over the past few years, with Epic alleging that Google’s management of the Play Store was anti-competitive. Now, the companies have reached an agreement, and Google is starting to implement changes in the app store as outlined in their settlement. The reduced fees for developers and new payment options promised by Google are rolling out in select markets this month before being expanded.
Until recently, Google followed a billing approach in the app store similar to Apple, charging most developers a 30% fee for transactions in the Play Store. This was the only option, and directing users to make purchases outside the store was prohibited. This led to issues for Epic Games in 2020 when the company added cheaper external billing to the Android and iOS versions of Fortnite, resulting in the game being removed from both stores and a lawsuit being initiated. Although Apple largely won its case, Google stumbled in its attempts to control the Play Store while maintaining a more open appearance.
The judge in the case intended to introduce some radical measures in 2024, including requiring Google to distribute third-party app stores in Google Play. The agreement, which Google noted will end its dispute with Epic worldwide, does not go that far. However, developers will soon receive the promised fee discounts.
New Fee Structure and External Payments
Starting June 30, developers in Europe, the UK, and the US will have access to a new fee structure. This system will split the fee into two components: a payment fee and a service fee. The biggest advantage for small developers is a new fixed 10% service fee on the first $1 million of annual revenue. Above this amount, the rate for different types of transactions can reach 25% for existing installations. For apps installed after June 30, the maximum rate will be 20%.
Developers will also finally be allowed to direct users outside the Play Store to complete a transaction. Google states that they can develop a choice screen “according to our UX recommendations” to guide users to these external options. Developers will pay the standard service fee for these purchases but will avoid the payment fee. All transactions processed through the Google Play Store platform incur a 5% payment fee — even the base rate for publishers earning less than $1 million. Google notes that the payment fee is set at 5% in the initial markets but may differ in other regions.
Further Changes and Global Implementation
The start date of June 30 was stipulated in the agreement for the initial markets, but Google will subsequently make these changes global. Australia will join the new fee structure on September 30, and on December 31, Japan and Korea will follow. All other regions will transition to the new system on September 30, 2027.
Google is also working on changes to programs known as Games Level Up and Apps Experience, which may offer developers reduced fees. The Games Level Up program already exists, providing increased visibility in the Play Store in exchange for implementing more Google Play features. Soon, it will also include a lower transaction fee. The Apps Experience program is new and will offer a similar deal for non-gaming content in Google Play. These programs will be available to developers in Europe, the UK, Australia, and the US on September 30 this year. For developers in other countries, they will become available after they are added to the new payment system.
Overall, these updates will help developers retain more revenue on the Google platform, but they do not change the fundamental dynamics. Google still firmly controls the Android software ecosystem and continues to take a cut from every sale. This may change when Google moves to the next phase of the settlement, which is not mentioned in today’s announcement. According to the terms of the agreement, Google must also certify third-party app stores and allow them to operate more like the Play Store on devices. This may take more time to implement, especially since Google is also beginning to roll out developer verification in the coming months.
Source: Ars Technica