Google will consider lowering Play Store cut to 15% for certain apps | Hacker News Reader

Google will consider lowering Play Store cut to 15% for certain apps

android-developers.googleblog.com

162 pointsPandabob101 comments

Large customers normally have lots of leverage: "if you don't give me a good deal, I will take my business elsewhere". I run an alternative to the Apple App Store for jailbroken iOS devices (Cydia); and, when I have sold software (which I did "at scale" for a decade) I absolutely was forced to cut deals--sometimes ones extremely lucrative for the developer--to keep the business of my largest clients from not only listing their products (which notably were generally ineligible, for technical reasons as opposed to content ones, from being available in the official App Store) with competing stores or even merely accepting payments themselves, but actively building their own competing stores! Think about it: if you are paying a hefty percentage of your revenue to someone else in fees--and are doing enough volume (as you are a large customer)--you can afford to hire an entire team to work on this problem as the App Store is in no way "magic" or anything... at which point you "may as well" offer the service to others in an attempt to cut the margins of your prior fee recipient. It should be the small customers who generally tolerate the (on a percentage basis) higher fees, as they are willing to pay a potentially "hefty cut" for the privilege of using an off-the-shelf, integrated solution that users trust, as the absolute cost of that larger cut is small, and is thereby unlikely to be large enough to make sense expending a bunch of effort building (and marketing) a bespoke solution (that users might not trust anyway); but if you aren't having to fight for the larger customers, something distorted is happening: that Apple and Google (both, which might be surprising to some but maybe less if you read Epic's lessor-known lawsuit against Google surrounding anticompetitive moves Google has taken--and maybe are now attempting to address, but only now--to lock in their Play Store) feel able to specifically squeeze their largest customers with seemingly no ramification is a testament to the power they possess to control and direct the relevant markets from their respective positions.

Sure, but it’s important to note that over time both companies have carved out special deals and considerations for larger customers. You can read this for yourself in the news and numerous court proceedings where emails have been released showing the companies having these exact discussions.

It’s a bit contentious but it appears Epic itself tried to get a special deal from Apple [1]. Why would you even bother asking if they don’t negotiate or cut deals with different app vendors? Apple (and maybe Google idk) even changed/lowered pricing for certain app categories because of developer complaints.

[1] https://techcrunch.com/2020/08/21/apple-contends-epics-ban-w...

Do you have a source that Apple’s waived or otherwise modified their cut with other vendors or “app categories”? Your source only shows that Epic attempted to make a deal and failed. Apple then cut the fee for small developers to appease the public _after_ the Epic lawsuit.

You can search around for various large companies and deals or discussions they’ve had with Apple. Uber, Netflix, Facebook come to mind.

Please note the specific language I used in my comment as well.

As an example: https://www.theverge.com/2021/5/5/22421734/apple-epic-netfli...

You’ll have to do some digging too if you’re interested. I can’t remember exactly and now when I search I just get current news as it relates to pricing for different app categories/subscriptions, etc.

Thank you for your comment. One minor nitpick: The words app store shouldn't be capitalized because Apple does not have a trademark on that term. They have a pending trademark and when Amazon started their "AppStore" app store, Apple took them to court over it and they ended up dropping the case before it was concluded because they would have lost.

Of course your iPhone automatically capitalizes it and it's still listed as a trademark on their site because Apple is so petty.

"because they would have lost" -> we don't know if this would indeed happen because words "app" and "store" are so generic... writing them capitalized does not change this much, because everything you write in a title is capitalized in English language...

If Apple dropped the case, I think it is fairly safe to assume they saw defeat in their future. Any reason to assume otherwise?

It might have been a settlement out of court?

That isn't the same as dropped, to me. So, maybe?

Maybe it was part of the settlement that they "drop the case"...

Companies also drop cases where winning is simply not worth the money. Owning an App Store trademark doesn’t seem be valuable in the way say iPad is because it’s not a separate product.

If we're guessing, another reasonable guess is that they worked out a licensing deal so they wouldn't have to fight Amazon but they could still go after the next guy that tries it.

Right, but that is the same as a loss being expected. They want to wait for someone that they think they can make a winning case against. Right?

Not really. What they want is to protect their Trademark and avoid direct competition. Licensing serves to protect the mark in a way that just ignoring Amazon's behavior doesn't.

Apologies, I should have asked if you have evidence that they licensed it? If so, that would require Amazon to note it in their site, no? I see no reason to think that is the case.

You're on 3rd order assumptions at this point

This feels like a useful metric, but one I haven't really heard asserted before. Care to elaborate?

It's nothing formal just saying an assumption based on an assumption keeps having lower chances of being correct the further you take it.

That’s not the test, Word is a trademark despite WordPerfect coming out several years earlier. Trademark law is kind of silly, but forcing every product to be called either a made up word or some long description wouldn’t be a net benefit.

OK, so, as a native English speaker (and maybe specifically one in America), I generally try to capitalize "proper nouns", whether you have standing for a trademark or not... I thereby will happily talk about how "the App Store is an example of an app store" (though I also tend to disambiguate at least one instance with "Apple App Store", which, I think, certainly should be capitalized).

> Capitalization is the difference between "I had to help my uncle Jack off a horse" and "I had to help my uncle jack off a horse", amirite?

Well... "I helped my uncle, Jack, off a horse" is the actual correct way to write that sentence.

Uncle is a title, so if it’s used as GP did (rather than as a noun like you did), it doesn’t require the commas in this way. Consider the word Mister/“Mr.”

Both are correct but use the words differently.

Yeah. FWIW, I had considered modifying it to capitalize "Uncle" as well, but honestly I don't know the rules for that, and the original copy of this I was quoting hadn't done so (though I had seen others which had) ;P.

All their announcements read like fees will be automatically reduced to 15% for the first 1M$, and even the linked article implies that:

Starting July 1, 2021, the service fee for each developer will be 15% for the first $1M (USD) of earnings you make each year when you sell digital goods or services.

However, when you read on, you realize that it's an opt-in that you need to take action on:

To officially enroll for the 15% service fee tier, you must: [list of requirements and steps]

From https://play.google.com/console/developers/paymentssettings :

Create an account group to help us understand if there are any other developer accounts that you're associated with. We'll use this information to make sure that you're eligible for Google Play developer programs and services, such as the 15% service fee.

This looks like a fully arbitrary requirement that has nothing to do with the 15% fee and everything with Google collecting as much data as it can get away with.

Isn't this just saying "No creating 10 developer accounts to get the discount on $10M of earnings instead of $1M" ?

Small business discounts are very vulnerable to abuse - when the UK introduced a tax break on the first £X of employee salaries, giant corporations like G4S shifted their employees to work for 48,000 new "small businesses", each with a handful of employees, to claim the tax break 48,000 times.

Indeed, after working through the new bureaucracy, I've come to this realization as well. But the quoted wording isn't really helpful to realize that.

Well... Did they send an email about this change to every app developer, or not? That would be telling.

Yes: https://news.ycombinator.com/item?id=27616978

> when the UK introduced a tax break on the first £X of employee salaries, giant corporations like G4S shifted their employees to work for 48,000 new "small businesses", each with a handful of employees, to claim the tax break 48,000 times.

Can you point me to something that talks about this? I tried a quick Google search but wasn't able to find relevant results.

I was having a a discussion with a friend who was advocating for more small business tax breaks a couple weeks ago. My counterargument was that almost all Amazon delivery drivers are technically employees of small businesses, but I'd love to have this as a more concrete example of a large corporation abusing small business benefits.

https://www.bbc.com/news/uk-57021128

not quite as the poster claims. G4S didn't "shift" employees, they hired new people to meet their new demand for covid related work. for these new people, they used employment agencies that were "Recruitment and Employment Confederation accredited and members of the government's Crown Commercial Service (CCS) Framework."

it appears the accreditation of these new employment companies by the government was lacking.

Thanks

Opinions are my own.

That view seems a bit too cynical. The requirement is a simple abuse-prevention step. When you work at the scale of Google, there are constant threat of abuse that you need to address.

It looks more like a way to have a ability to ban even all your associates when the algorithm randomly decides to ban you.

I resent Google's policy on insisting using their payments gateway, but this criticism is unfair: Google Play console has message about enrolment to this program on the most visible place they have, with a very noticeable red tint, so it is impossible to miss whenever you log into that console.

As a full-time app developer who consequently follows all Android design, policy and direction changes, you are not going to miss that message. As a part-time / hobby project developer, I only read the news posts that made it look like it was an automatic fee reduction.

They've also sent me an email explaining that I need to enroll this program.

Apple requires enrollment in the small business program too, and it was much more involved in the Google one. For Google you basically just created a group and asserted which developer accounts were part of it, then approved it.

Just curious, what benefit does google get by making it opt in? Do they hope that developers missed the message and profiting on the difference?

IIRC when I signed up for it, you had to link any other accounts that your company owns and agree to some additional stuff (since they need to make sure people aren't using multiple accounts to get around the $1MM limit). The notice is very visible (plus emails).

Most app developers rarely visit Play Console once their app is published. Either they aren't making updates, or they are a larger operation and use the API to deploy. Unfortunately many of them also don't notice Play developer emails because they get in the habit of ignoring them. In some ways Google I/O and the press are vital in getting the word out to devs about important changes.

Source: Worked at Play on developer tooling.

Is nobody else bothered by the fact that it took impending government intervention to cause a change in practices?

To me it raises all sorts of questions as to their profit margins, anti-competitive practices, and what the money they're sucking would have done for the other smaller businesses that actually wrote the apps they're profiting off of.

When things get this "bad", it seems indicative of a market disorder. There is an imbalance that can't simply be solved via raising capital to start a competing service. The degree of vertical integration in the mobile device market makes supplanting their position all but impossible.

Demand web installs. Frictionless web installs without scary warnings that serve to make people distrust the web.

People get into cars and use the web everyday. They don't need Apple or Google branded Floaties® for Computing.

Tell your legislators.

This change will be made effective on July 1.

> The service fee for each developer will be 15% for the first $1M (USD) of earnings you make each year when you sell digital goods or services. *

* https://support.google.com/googleplay/android-developer/answ...

It's unusual to pay higher fees the more you sell.

This is probably an indication that Google/Apple make most of their App Store profits from a small number of big developers.

It's an indication of a monopoly with a lack of competitive pressure.

It's not that unusual actually. Think of all the Saas apps that charge you by tier based on some arbitrary limits.

Sure, in those cases you consume more resources, but those are probably negligible compared to the increase in price. The reality is that they charge you more because you make more money from the service, hence you are willing to pay.

It's not precisely the same, obviously. For one, you can chose the services you want, while you must go through Apple's App Store. And since they don't charge a percentage of revenue but charge for resources, you don't see the correlation.

But the final effect is the same. The more money you make, the more you pay.

No, in most SaaS environments bigger customers are more expensive to maintain. They are harder to shard or migrate when you need to keep their data accessible, linked, etc... That's why there are limits in the first place and the don't really have to be arbitrary.

I don’t know about most. Value based pricing is common concept in SaaS and it explicitly doesn’t price based on the cost of delivering the service.

That said, a lot of higher tier offerings in SaaS differentiate themselves by SLAs, Support, assigned CSM, consulting time, etc. Those are cheap-iah to deliver when everything goes well but can cost a lot when there are problems.

Back when Apple announced this there was a good discussion about it on Accidental Tech Podcast, about how this was a really smart move.

It gives a price cut to the most number of people, but requires Apple to give the least amount of money away. This gives them really good press, and helps them to deal with their "image issues" that they have at the moment. Basically a win win.

The stranger thing is for small apps Apple/Google is providing services of more than 30% I think. Basically they are managing everything and a lot of time also promoting it for a small price. But the apps that are already famous like fortnite, a user who install it will likely install if Apple/Google is not involved.

Awesome and rare to see a progressive fee structure

When every moderately successful app is launched in a separate company will Google say, "it's the rules that are broken there's nothing wrong with lowering your play store liability by following the rules."

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That's such a large cut, I just don't think the Play Store provides nearly that much value. It's also a bit of a strong-armed position anyway, so the fee feels even more disproportionate. You only have to pay them because they've cultivated a mono-store environment for android phones.

The play store provides basically no value at all, not even the marginal value Apple's App Store provides.

You're saying that the development tools, backend hosting, and other play services provide no value to developers? I disagree but at the same time google has been doing a less than great at promoting android apps and helping developers monetize their apps. Atleast compared to apple.

Why is there no meaningful competition in app stores for android where sideloading is possible?

Convenience and higher (perceived) safety of the google app store?

Play store works too well. They've hardly banned anything. They handle payments well (Inc refunds, reminders of upcoming charges etc). Why bother going elsewhere?

I'm not really answering your question here, but sideloading allow alternatives with different goals than google play.

For example F-Droid is actually very big particularly with users trying to get rid of google services on their phones. But it's a marketplace for opensource apps and services, which most commercial apps are not.

F-Droid architecture is terrible (it could take them weeks to build an app, and since they build all apps updates are severely delayed) and their app is a buggy mess. In other words, F-Droid not being widely used is not an indication of people not wanting to use a third party store per se even if it only carries open source apps.

Now we know the benefits that the google playstore provides.

You can host your own fdroid repos and use Aurora Droid as client instead.

e.g. Quasseldroid is distributed that way. The result is an awesome store UI, instantly deployed updates, and independence from the Play Store.

The only disadvantage is that, because it's not preinstalled, no one knows about it.

People want a plug and play solution, not to have to research F-Droid client alternatives and then install third party repos which they don't know if they can trust.

Sure, but now you're saying the actual value of the Play Store is that it is preinstalled. Not the technology it provides.

I said if I Google "F-Droid" I should get to a webpage that contains an app that works properly and that comes with good repos preloaded. Similar to how Steam is installed on PCs.

Instead I get a crappy app with very outdated repos. That's not good enough.

It is hard to make revenue from an app store, because most downloaded apps are free ones, and a large percentage of them use Admob to monetize. A qualified competitor needs to provide significant amount of bandwidth for the free apps.

For paid apps, Google could always cut less than you if they feel threatened.

And Google controls the Android OS development.

BTW, there are tons of Android app markets in China. No monopoly there.

because running an app store costs a lot of money and would only be profitable if you had a lot of customers at which point you have a hard time fighting the advantage google has with play store already available.

An app store is not a product, it is a feature.

If the App Store is a feature, then maybe they should charge more for the product to cover that feature.

The question was why is there no meaningful competition in app stores - not sure how charging more for the product would cause there to be more app stores for that product?

Why would I, as an end-user, install another app store? I can't imagine a compelling reason. Install apps banned by Google? Never heard of any that I want. Install apps that have better pricing because of lower fees? Haven't heard of any, I use mainly very popular apps like Uber and Yelp. Installing an app store sounds like a "big" thing to do to my phone, what's the super compelling reason I should do it?

NewPipe and Simpletask are not available on the Play store but are on F-Droid.

I’ve never heard of those and don’t know why I’d want them. Which gets to one of the main purposes of the official store, which is getting your app in front of people who haven’t heard of it.

> I’ve never heard of those and don’t know why I’d want them.

Google generates revenue from YouTube by artificially hindering the YouTube app by preventing it from playing videos in the background or with the screen off unless the user pays for a monthly subscription.

NewPipe removes that artificial barrier.

The Google search term "how do I play YouTube videos in the background" yields over 2 billion results[1]. There is an incredible amount of demand for this feature alone.

[1] https://www.google.com/search?q=how+do+i+play+youtube+in+the...

Your employer might require it.

Seriously, I'd go so far as to suggest that this push for side loading is a bit of a red herring. Even if multiple stores existed on iOS and Android, and even if they worked just as well as the official stores, I don't see why consumers would be bothered installing them (for the reasons you mentioned). Companies will still need to list on the App Store or Play Store and adhere to the platform vendors rules if they want any chance of success.

The only way I'd see alt stores being successful is if first-party stores were banned. This is pretty much what has happened with Android in China, but the UX is a mess. Users have to install a half-dozen stores, with each store taking up a pretty significant chunk of system storage and resources and with each store managing updates independently (which often creates weird conflicts when the different stores interact with each other). And for all that trouble, it's not even as if these stores charge developers any less than the App Store and Play Store do. Why would I as a consumer voluntarily sign up for this?

The value in the Play Store and App Store is that it is a single, centralized repository where users know they can find and manage all of their software. This significantly reduces the cognitive load associated with software installation.

Today? There is little reason, because there's not much out there.

But if it were actually possible to build a competing store, you would see companies offering features, innovations, and value that you will never see from Google or on Google Play. That's the free market.

I know I would install a store that was actually curated (not like what Apple and Google claim) with apps that have no malware, maybe no ads, etc. There are a lot of potential business opportunities in this space that cannot possible succeed today with the current anti-competitive practices of Apple and Google.

Because most users can't decouple the App Store from the OS.

Because if your app is on the Play store, it installs and updates easily and neatly.

If you install a third-party store, every installation is met with scary warnings about installing from unknown sources and how unprotected you are.

It's hard to make a store work if your customers are bombarded with warnings about how dangerous you are.

That's not true, you only have to give it (and not even all unknown sources, just allow e.g. Aurora Store) permission once.

There are popovers that show up every time you install an app from not the play store if you give it permission. And you can't autoupdate apps from not the play store.

Although this is changing as of Android 12.

But you better believe that change is significantly because of fear of antitrust regulation than Google doing the right thing.

Your question could have been written 15 years ago about Internet Explorer vs Netscape Navigator.

It's mostly as a result of pre-bundling and commercial agreements. We've seen the gradual move away from AOSP to a situation where 'Google Play Services' becomes a closed-source dependency for almost every major Google App, together with their iron grip on device manufacturers to strong-arm its installation in exchange for access to their ecosystem.

At that point, Play Store is the default and most users wouldn't need/want/think about moving away from it.

But also.... ....just in case those naughty users did think about being unfaithful. There is a lot of ethically gray UX design that makes it harder for a third party App Store to gain as deep an integration into the OS, by raising the barrier.

For example, overly alarmist alerts relating to security / unknown sources. Your average techie might know what they're doing, but they're sufficiently scary for your mum to probably abandon her attempts to install that third party App Store and just use the default.

Think about how expensive user acquisition is in general. You need to pay a lot for advertising, you need to have a solid product, an operations team to look at analytics and constantly improve the user experience, you need to offer deals that give new customers value, etc. You have to spend a lot of money, especially if you want to compete with Google.

Now on top of that, you have these burdens that make it practically impossible to compete with Google, even if you have the funding, talent, and a better product:

* You need to train every potential customer on how to find and enable the "allow unknown sources" option on their phone (which is different on every phone, and constantly changes place between OS updates)

* Convince them to ignore the many scary warnings from Google about malware and security and all that stuff when they try to do so

* Teach them how to download and install an APK from your website (and maybe how to deal with the Play Protect pop-up that insinuates your app is possibly malware)

And if you manage to do that with enough customers to build a sustainable business (unlikely), you'll still be at a competitive disadvantage on their phone because your store can't install updates automatically, so you need to send users annoying notifications to install updates manually.

You're also at risk of being targeted by Google's competition ~~hit-squad~~ I mean Project Zero, which, if you get in their sights, they will analyze your store around the clock until they find a vulnerability, and then irresponsibly disclose it in order to scare customers away[1]

Plus there's Play Protect, which (at least last time I checked) you can never really get rid of. When you install an app, it will ask you if you want Play Protect to send it to Google for analysis. If you decline, it will just ask you again later.

And if you accept, Google's notoriously unreliable bots could decide that your app is malware, and then block it from being installed on any device. Good luck getting a decision like that resolved.

[1]: https://arstechnica.com/gadgets/2018/08/fortnites-android-vu...

Because Google forces phone manufacturers to install Google Play store on every device manufactured.

Otherwise, Google threatens manufacturers out of the Android ecosystem, and will not allow them to install Gmail, Google, etc apps.

So, there is no competition at all. Google is a monopoly.

Google prevents mobile app distribution competitors from competing with the Play Store on feature parity because user installable 3rd party mobile app stores cannot implement automatic upgrades, background installation of apps, or batch installs of apps like the Play Store can.

If the user tries to install an app on their own, they're shown scary warnings and must adjust arcane settings, but if they use Google's Play Store, no scary warnings are shown and no settings need to be adjusted. They're told they're "protected" by Play Protect, but aren't shown scary warnings about the fact that the Play Store is the main distribution method for malware on Android[1] when they go to install apps with it.

The Play Store isn't alone in being a vector for malware, as Apple's App Store is responsible for nearly half of a billion malware installs of just XcodeGhost alone[2]. This is why the mobile app distribution market needs healthy competition.

[1] https://www.zdnet.com/article/play-store-identified-as-main-...

[2] https://www.vice.com/en/article/n7bbmz/the-fortnite-trial-is...

This is just more evidence of price fixing[1] by the mobile app distribution and app payments cartel[2] consisting of Apple and Google.

[1] https://en.wikipedia.org/wiki/Price_fixing

[2] https://en.wikipedia.org/wiki/Cartel

Your citations appear to be links to definitions rather than evidence of price fixing by a cartel. Oops?