Google reportedly cutting the rate it takes on third-party cloud software sales

CNBC reported today that Google LLC is cutting the amount of revenue it takes when customers buy third-party software on its cloud marketplace to compete with Microsoft Corp.’s Azure.

Under the changes, the Google Cloud Platform is cutting its percentage revenue share from 20% to 3%. That’s the rate Microsoft Azure charges.

The news that Google is set to cut its revenue share was initially confirmed only by a person familiar with the matter. Google has yet to confirm the change to a 3% revenue share directly, instead only indicating that a change in the rate is coming.

“Our goal is to provide partners with the best platform and most competitive incentives in the industry,” a Google spokesperson told CNBC. “We can confirm that a change to our Marketplace fee structure is in the works, and we’ll have more to share on this soon.”

Presuming the cut in the revenue share goes ahead, it will not be the first time Google has reduced rates across its product suite this year.

In March, Google reduced the cut of revenue it takes from applications and games sold on the Google Play Store from 30% to 15% on the first $1 million a developer earns from sales. Google said that under the change, developers will see a 50% reduction in fees.

In November, Apple Inc. made a similar cut in its revenue take from 30% to 15%, but only for companies that earned less than $1 million in the previous calendar year.

Reducing the revenue taken from third-party sales has become an increasingly popular way to entice developers to a particular platform. Microsoft cut the rate it takes from developers selling software in the Microsoft Store to 5% in March 2019.

CNBC noted that the trend among big tech companies to decrease the amount of money they retain on their platforms is primarily related to competition, but regulatory and legal concerns are also mounting.

Image: Google Cloud