Google Play deal frustrates critics of steep app dev fees

Alphabet Inc.'s agreement to pay $700 million to consumers and states and open the Google Play Store to competition will leave intact the heavily-criticized commissions the technology giant charges mobile app developers.

The settlement announced in a court filing and lauded by elected attorneys general who helped negotiate it will make it easier for developers to offer apps to consumers outside Google Play and use their own payment systems. But there's a catch: the developers will still have to pay Google a service fee of as much as 26%.

Sharp differences of opinion emerged Tuesday as to how much the accord will reshape Google Play's business model and benefit consumers. While some state officials heralded the deal as an end to Google's abuse of its market power, an executive at Epic Games Inc. the maker of Fortnite that has waged a three-year court battle with Google and Apple Inc. over their separate app stores said the settlement will provide "no true relief for consumers or developers."


Google and Apple have for years faced complaints that their digital stores, the dominant marketplaces in the $200 billion-a-year mobile app industry, collect exorbitant commissions from developers who typically have few other options resulting in higher costs for consumers. Those grievances have spurred app makers and regulators to rein in the two smartphone giants so that rival payment and distribution platforms have more space to compete.

For all the incremental changes that the Google settlement offers, it won't dismantle the fee structure. Google will still rake in profits because the settlement extends to all developers a program that calls for a service fee of as much as 26% not much less than the current 30% commission rate charged to developers that make more than $1 million in sales each year.

Google maintains that such fees help support the company's investment in its app store and Android operating system platform.