After facing a strong backlash from Indian app developers over Google’s in-app purchase policies, Google has now reduced the service fee from 30% to 15%. This service fee is applicable to app developers who offer “in-app sale of digital goods and services” which includes in-game items like guns, avatar or subscriptions to content platforms.
The reason as to why Google’s policy angered developers was because Google had made it mandatory to use Google Play’s billing system for in-app purchases and pay a high 30% as service charge.
What’s an in-app purchase?
For those unaware, in-app purchases don’t include things you purchase from Amazon or pay money to someone using Paytm. In-app purchases mostly mean if you are buying a Gold edition of Tinder or buying a new gun in Call of Duty Mobile or other similar kinds of purchases.

What’s the new Google policy?
Google has announced that starting July 1, 2021, it has reduced the service fee Google Play receives to 15% for the first $1M of revenue every developer earns each year. “With this change, 99% of developers globally that sell digital goods and services with Play will see a 50% reduction in fees,” Google said.
It is important to note that Google has not removed the requirement for developers to use Google Play’s billing system for in-app purchases. All app developers that offer in-app purchases will have to integrate Google Play’s Payments system and there are no two ways about it. But the reduction of service charge may be seen as a relief.
App developers have got a deadline until March 31, 2022 to integrate Play payments into their apps for purchases.
Those apps which are already using Google’s payment mechanism can benefit from the reduction of service fee from July 1, 2021. Google further clarified that “more than 97% of apps globally do not sell digital goods, and therefore do not pay any service fee.”
Google’s ‘30% tax’ vs Indian developers: The background
There are two ways you can buy an app subscription or make in-app purchases. For most apps, people buy something using the credit card linked to their Google account basically using Google Play’s billing system. However, for apps like Netflix, Tinder and few others you have to make the purchases independently. And for developers, not using Google Play’s billing system it has been a big relief simply as they didn’t have to pay “tax” to Google which was as high as 30% of the bill.
Until last year, Google did not strictly enforce that all Android apps on Google Play will have to follow Google Play’s billing system. However, around October 2020, Google made it mandatory for all developers selling digital goods in their apps to use Google Play’s billing system only and pay ‘30% tax’ on in-app purchases.
Now, this 30% Google tax is not something new. It was always there and even Apple charges the same. But Google did not care much about it and thus apps like Netflix, Spotify, Tinder and other big names who had the capacity to create their own payments ecosystem went ahead to create their own payments processes to avoid Google Play’s billing system.
For Indian developers, the service charge of 30% seemed quite high and they felt trapped. In India, Android happens to be the most popular smartphone platform, for an app to be popular, it has to be there on Google Play store. And if the developer chooses a freemium model, then they will have to offer 30% of the revenue to Google. Indian developers were also angered by the fact that they also had to compete with Google’s own apps which are better distributed through Google’s advertisements.
The good news: Google tax has reduced from 30% to 15% for the first $1M of annual revenue
By making Google Play’s billing system mandatory, one thing is clear, no developer can make money by being present on Google Play store and not pay any commission to Google at all. Be it education, dating, fitness or others, any app which provides a freemium model and charges money in-app will have to sign-up for Google Play’s billing system.
Whatever purchase is made, Google earlier would have charged 30%, which to most developers is quite high. But now Google has reduced the tax from 30% to 15% for the first $1M of revenue every developer earns each year.