At the company's earnings call this Monday, Google's CEO Sundar Pichai fielded a question about 'alternative app distribution channels' and how they might affect the company's earnings from the Play Store. In response, the Google veteran insisted that the company will hold its line on the 30% cut it demands from all purchases made via the Play Store.
The question was likely a response to Epic Games' decision to directly distribute Fortnite on Android, without using the Play Store. The decision is estimated to have cost Google as much as $50 million in 2018 alone, and if the trend is adopted by the video game industry at large, it could represent a significant threat to Google's ability to monetise its control over the most popular mobile operating system in the world.
Epic's decision was largely made to cut costs, with CEO Tim Sweeney stating,
“The 30 percent store tax is a high cost in a world where game developers’ 70 percent must cover all the cost of developing, operating, and supporting their games. There’s a rationale for this on console where there’s enormous investment in hardware, often sold below cost, and marketing campaigns in broad partnership with publishers. 30 percent is disproportionate to the cost of the services these stores perform, such as payment processing, download bandwidth, and customer service.”
Of course, Sweeney did not mention the importance, from a security perspective, of having one centralised store for apps that is curated by Google. As a Google engineer noted soon after the Fortnite's release on Android, the way Epic was initially distributing the game left open a major vulnerability that could allow attackers to silently install fake APKs during the installation process.
Google could try and appease developers like Epic Games by reducing the cut it takes from Play Store purchases, but Pichai believes the current revenue split is fair and should not be changed. He said, “I think there’s a value exchange there and it’s been the industry standard,” That 'industry standard' he's referring to is, of course, Apple's App Store, which also charges a similar tax for purchases made on iOS devices, and which has also come under fire by some developers for being far too exorbitant.