Two major good news surprises! Tech giants suddenly announce: price cuts!

Global game publishers receive good news!

On March 4, local time, Google announced major changes to the Google Play store: first, the app store’s commission rate will be reduced from 30% to 20% or lower; second, third-party payments will be opened up, allowing developers to use settlement systems other than Google’s own, including guiding users to pay via their own websites.

Analysts have pointed out that these two major changes are a “major positive” for game publishers worldwide. They will lower game publishers’ channel costs, give game publishers greater operational autonomy, and are expected to boost profits for game companies. In addition, payment service providers and fintech companies will also benefit.

For Chinese internet companies going overseas, including game publishers, besides the direct revenue increase brought by lower channel costs, more diverse payment methods will give companies more flexibility to set pricing strategies and marketing approaches. This will improve their ability to directly reach users and make it easier to accumulate user data and build user profiles, thereby optimizing the payment experience and increasing payment willingness and user retention.

Google Play reduces the take rate

On Wednesday, local time, Google announced a new system for apps on its Android phones and tablets, agreeing to provide competitors with easier access pathways and lowering costs for developers. The move is intended to address U.S. antitrust lawsuits and comply with new regulatory requirements in Europe and elsewhere.

Google said that by June 30, most app stores in the United States, the United Kingdom, and the European Economic Area will reduce their commission rate from 30% to 20% or lower. By the end of 2026, Google will roll out its “Registered App Stores” program in regions outside the United States, allowing users to download and install third-party app stores directly from the web (for example, the Epic Games Store), rather than facing the complex restrictions set up by Google as in the past.

Google will also allow app developers to offer their own payment systems for in-app purchases, using them in parallel with Google Play’s payment system. Therefore, Google will separate the calculation of “payment fees” and “service fees.”

In the documents submitted to the court, Google listed the new fee structure. It should be noted that if a user purchases content again within an app that has already been purchased, Google will still charge a 25% fee. In addition, if a user follows a link within the app to download or purchase content on an external website, Google plans to charge a fee of between $2 and $4 or 20%. If developers join the new “Games Level Up” or “Apps Experience” program, they can obtain a more favorable fee rate.

Samir Samat, vice president of product development at Google, said in an interview with Bloomberg News that the announcement is not only about doing what is necessary—“it goes far beyond” what European and UK legal changes require.

Samat said that under the proposal, other companies can register with Google, pay a one-time fee, and provide an app store on Android. He also said that Google will reduce the fee standard it charges developers from the usual 30% to 15% or 10% (for recurring subscriptions). The fee changes are expected to take effect in June in the United States, the United Kingdom, and the European Union, and be implemented in Australia, South Korea, and Japan by the end of 2026.

Epic Games, which has been involved in a long-running antitrust lawsuit with Google, said that Google’s new policy will eliminate the concerns about the Android platform that Fortnite developers have, and address lawsuits in the United States, the United Kingdom, Australia, and other places.

“Now anyone can launch a competitive app store.” Tim Sweeney, CEO of Epic Games, said that these changes will help restore a healthy competitive environment for the app market, in stark contrast to iOS. He believes Apple is still blocking competing app stores, or charging a “core technology fee” on external purchases.

Google did not separately disclose how much revenue its Android operating system or Google Play store contributes. Documents from Epic Games’ lawsuit in the U.S. show that the tech giant’s app store brought in $14.66 billion in sales in 2020. Analysts previously estimated that reforms to its app store prompted by the new regulations and lawsuit requirements could result in a loss of $1 billion in gross profit.

The reduced fees may affect the profits of Google’s parent company Alphabet, but the company is now better positioned to absorb the hit because its market value has reached $3.7 trillion—four times higher than when Epic filed the lawsuit.

However, Google is facing other potential setbacks as well. In another case brought by the U.S. Department of Justice, after being declared an illegal monopoly, Google’s search engine was ordered to share more of the data it collects. Last year, in another federal lawsuit, part of the technology supporting Google’s digital advertising network was also found to have abused its monopolistic position. A federal judge in Virginia is weighing whether to order a split to restore competition in that case.

Epic’s 2020 lawsuit against Google Play occurred at the same time as a similar campaign targeting the App Store on Apple’s iPhone, which still has legal disputes over how to manage alternative payment systems.

Sweeney is not optimistic about Google agreeing to a similar deal with Apple, because the cases have unfolded differently. In the lawsuit against Apple, a federal judge concluded that the iPhone app store is not a monopoly, but still ordered changes intended to make it easier for consumers to switch to alternative payment options—Epic believes that this shift has not happened.

Game publishers and others will benefit from it

Analysts say that Google’s new rules provide the biggest benefits to game publishers worldwide. When the commission drops from 30% to 20% or even lower, it means game publishers can earn an additional 10 yuan for every 100 yuan in revenue. For high-revenue, hardcore games, this directly translates into net profit growth of tens of millions or even hundreds of millions.

Additionally, once third-party payments are opened up, game publishers can guide users to use their own payment systems (such as website payments), completely avoiding a 5% channel fee. Overall costs can potentially drop to as low as 15%. On top of that, game publishers are no longer constrained by Google’s closed ecosystem. They can reach users more directly, accumulate user profiles, and execute more flexible marketing and pricing.

Besides game publishers, the following three types of companies will directly benefit:

1）Third-party app stores and distribution platforms. With its “Registered App Stores” program, Google allows third-party stores to comply and onboard into the Android system. This means these platforms no longer need to install via complex “sideloading,” user installation barriers will be greatly reduced, and they will enter a period of growth driven by increased user adoption.

2）Payment service providers and fintech companies. To save the 5% channel fee, game publishers will heavily integrate with third-party payment systems. These payment service providers will gain a huge incremental market, with business volumes expected to surge.

3）Internet giants with strong proprietary channels, represented by companies such as Tencent, NetEase, ByteDance, and others. These companies not only benefit from lower fees for their gaming businesses, but also have powerful proprietary user bases and payment capabilities. This gives them a natural advantage when guiding users to switch to payments, enabling them to maximize the reduction of channel costs.