Please ensure Javascript is enabled for purposes of website accessibility

Alphabet's Google Slashes App Store Fees

By Eric Volkman - Mar 16, 2021 at 8:30PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company is mirroring changes made by Apple at the end of last year.

Following a similar move made recently by rival Apple (AAPL -0.90%), core Alphabet (GOOG -1.30%)(GOOGL -1.16%) has made deep cuts to the fees it charges developers of apps published on its Google Play store. It will charge developers only 15% of an app's price and its in-app purchases, exactly half of the 30% it previously imposed.

There is a catch, however -- the reduction only applies to the first $1 million of an app's sales; the fee shifts to that original 30% once sales cross the $1 million threshold. 

Young man triumphantly looking at a smartphone.

Image source: Getty Images.

That also mirrors Apple's recent adjustment. In November, the iPhone maker announced its App Store Small Business Program, which essentially feels like help-the-little-guy cover for a similar cut in fees. Apple also reduced its commission for qualifying developers to 15% from the previous 30%, up to that same $1 million limit.

The adjustments come in the wake of renewed criticism of the fees following a high-profile 2020 dispute over them between developer Epic Games -- the company behind the popular title Fortnite -- and Apple. Since Alphabet's fees are similar, that dispute quickly enveloped Google too. Lawsuits between Epic Games and both Alphabet and Apple are pending in various jurisdictions.

Regardless of which entities win these legal fights, Epic Games has already achieved one of its apparent goals -- to shine a light on Apple and Alphabet's business practices. In the eyes of many developers the app fees are extortionate, and in the glare of publicity the two companies look like greedy operators leveraging a strong business position to squeeze their partners.

Especially given Big Tech's recent scrutiny by arms of the government, it's not good to carry such a reputation. As such, this copycat move by Alphabet feels like a sensible change in strategy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Alphabet Inc. Stock Quote
Alphabet Inc.
GOOG
$2,300.11 (-1.30%) $-30.20
Apple Inc. Stock Quote
Apple Inc.
AAPL
$145.78 (-0.90%) $-1.33
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOGL
$2,293.99 (-1.16%) $-27.02

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
345%
 
S&P 500 Returns
119%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.