Google announces cut in app store fee by half on developers' first $1 million in sales

Alphabet Inc's Google has announced that it will cut the service fee it charges developers on its app store by half on the first $1 million they earn in revenue in a year, after a similar move by rival Apple Inc last year.

Both the companies have come under fire from large firms such as Microsoft Corp, Spotify Technology SA, as well as startups and smaller companies, that allege the fees deprive consumers of choices and push up app prices.

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Google said in a blog post on Tuesday that it would cut app store fees to 15 per cent from 30 per cent effective July 1, a move that would impact most of the developers on its app store. 

In contrast, Apple said in November it planned to lower its commissions only for developers who make $1 million or less in proceeds in a year from its app store.

Fortnite creator Epic Games said in a statement to Reuters that Google's move only alleviates some of the financial burden of developers.

"Whether it's 15 per cent or 30 per cent, for apps obtained through the Google Play Store, developers are forced to use Google's in-app payment services," Epic said.

Epic has been at loggerheads with Apple since August when the game maker tried to avoid paying fees on the iPhone maker's app store by launching its own in-app payment system, which prompted Apple to ban Fortnite from its store.

Data analytics firm Sensor Tower estimated that it could have cost Google about $587 million or about 5 per cent of the $11.6 billion it earned from Google Play last year had the service fee cut come into effect in 2020.