Fatal Blow to Small App Platforms: Google to Halve Application Fee | BusinessKorea

Saturday, February 24, 2018

Fatal Blow to Small App Platforms

Google to Halve Application Fee

As Google is going to halve its fee to 15%, smaller app platforms are likely to lose their competitiveness.
As Google is going to halve its fee to 15%, smaller app platforms are likely to lose their competitiveness.
Seoul, Korea
18 January 2018 - 9:45am
Cho Jin-young

Google changed its application fee policy and is going to halve its fee to 15% when it comes to apps with subscription content. Google’s dominance in the app market is likely to further increase and smaller app platforms are likely to lose their competitiveness under the circumstances.

According to industry sources, the global sales of Apple App Store and Google Play totaled US$40 billion and US$21 billion last year, respectively. In 2016, their sales in South Korea amounted to 2.02 trillion won (US$1.81 billion) and 4.46 trillion won (US$4.01 billion), respectively. Google took no less than 30% of the latter amount as its fees and those in the industry criticized the platform providers for their fee policy.

In response, Apple cut its fee applied to apps with subscription content in 2016 and Google adopted a similar policy at the beginning of this year. Based on the policy, local app developers can attract more paid app users to reduce their mandatory payments to Google and have more long-term users as well.

However, local platform providers, such as One Store, are expressing concerns over the possibility that Google will become even more dominant in the market. One Store’s sales and local market share are estimated to have stood at 904 billion won (US$813 million) and 11.8% in 2016, respectively.

“There are already many popular Android apps that are available only on Google Play,” said an industry insider, adding, “This monopoly is likely to continue after the fee cut and more and more users and apps will have to keep resorting to Google Play.”

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