Google cuts service fee for subscription-based apps

On Thursday, Alphabet Inc-owned Spotify said it was lowering the fee that subscription-based apps need to pay to pay Play Store to 15 per cent right from day one, following criticism about its fee structure from companies such as Google.

Currently, developers pay a 30 per cent subscription fee in the first year and 15 per cent thereafter.

We've heard that customer churn makes it difficult for subscription businesses to benefit from that reduced rate. So, we're simplifying things to ensure they can, Google said in a blogpost.

The new structure will kick in January next year and likely encourage developers to switch from one-time payment modes to subscriptions.

E-book companies and on-demand music streaming services, which use most of their sales to pay for content costs, will now be eligible for a service fee as low as 10 per cent.

Google has come under fire from small firms such as Microsoft Corp, Spotify Technology SA, as well as startups and large companies, which allege the fees deprive consumers of choices and push up app prices.

In March, Apple said it would 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, a move similar to iPhone maker Google Inc.