Google Cloud is considerably reducing the amount of revenue it takes from third-party software sales on its cloud marketplace. The platform’s percentage revenue share will soon be changed from 20% to 3%.
As the third largest global cloud infrastructure provider, the move comes as an attempt to increase competitiveness and attract software makers to sell their products on Google Cloud.
Market leader Amazon Web Services charges only a 5% listing fee, whereas runner-up Microsoft Azure also cut its take from 20% to 3% in July. Whilst competition is an obvious incentive for this fee reduction, regulatory and legal concerns are growing for large tech companies.
Google also decreased the percentage it takes from Play Store app purchases from 30% to 15% in July. Microsoft followed suit by reducing its cut of sales on its Windows app store from 30% to 12%. Meanwhile, Apple has been forced to allow developers to provide alternative payment methods instead of only allowing in-app purchasing.
Since its inception, Google has been unable to turn a profit from its cloud platform. In Q2 2021, Google reported a $591 million (£436m) operating loss from its cloud sector with $4.6 billion (£3.4bn) in revenue. Alphabet, Google’s parent company, still counts on advertising for about 82% of revenue and substantially all of its profit.