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Google, as well as Apple, has come under fire in the past few years over the Play Store (and App Store) “tax.” Basically, Google and Apple take around 30% of every transaction made on Android and iOS through the Play Store and App Store. On the one hand, this seems fair since Google and Apple built these platforms, and without them, developers wouldn’t be able to sell their apps to literally millions of people. But 30% on literally every single in-app purchase is a bit insane.
Epic Games took great offense to this and has offered ways to get cheaper in-app purchases for Fortnite. Before ultimately being kicked off of the Play Store and then the App Store. Epic then took both companies to court to sue over this and how it’s monopolistic of Google to charge 30%. Google recently lost that lawsuit (Apple beat Epic, however), and it’s a pretty big deal.
However, now we are hearing from Bloomberg that Google has explored lowering the cut of in-app revenue it would take from developers. So instead of taking 30% (or 15% from newer and smaller developers), the percentage would have been lower, however the report doesn’t give a concrete percentage.
Google started ‘Project Everest’ because it was afraid of regulatory scrutiny
This idea of exploring lowering the cut that Google takes was called ‘Project Everest,’ and the whole reason behind it was regulatory scrutiny. Google was worried that it could be done by regulatory overreach.
During an in-house presentation, Google ultimately decided not to go this route. Stating that “we can defend the status quo for a few months. Making proposed changes sooner may help support reasonable legislation, position Google as a leader, and prevent more draconian legislation.”
The bottom line though? Google was worried about losing out on billions per year in revenue. It was estimated that this change would cost Google about $1 billion to $2 billion per year from apps and between $6 billion and $9 billion per year in revenue from games. That’s not chump change; however, for Google, it is. In 2022, Google raked in $279.8 billion in revenue for the entire year.
Google did have another option, and that would be to allow app developers to handle in-app payment processing themselves and provide them with a lower percentage. Google calculated that this option would reduce annual Play Store revenue by only $250 million to $1.3 billion. A much easier pill to swallow versus the almost $11 billion.
However, with the verdict in the Epic v Google case, the search giant may be forced to make some major changes to the Play Store. With one possible change allowing customers to decide to have their in-app payments processed by Google or a third-party firm, that the app developer has listed.