This archive report was first published on 5 October 2021.
Google Cloud Platform has made a significant move by reducing its revenue share on its cloud marketplace to 3 percent, down from 20 percent. This change comes as the tech giant faces increasing pressure to lower its take rates.
According to CNBC, Google's decision is part of a broader effort to attract independent software makers to sell their products on Google's cloud. The company aims to provide partners with the best platform and most competitive incentives in the industry.
Google's move follows a lawsuit filed by Epic Games against the tech giant and Apple, which has attracted the interest of several governments' competition watchdogs. The lawsuit has put pressure on the tech giants to create a healthy competitive environment, resulting in the reduction of the cut they take from sales of other app developers.
As part of the ruling from the Epic Games lawsuit, Apple was prevented from blocking developers who wanted to provide links or other communications that direct users from Apple in-app purchasing. Microsoft has also lowered its percentage of sales it keeps from game purchases from its Windows app store to 12 percent from 30 percent.
Amazon Web Services (AWS), the market leader, charges a listing fee of 5 percent, contributing to its estimated $1 – $2 billion in annual revenue from its cloud marketplace. Microsoft and Google have also reduced their cuts to 3 percent, down from 20 percent.
Microsoft's chief operating officer for cloud and artificial intelligence, Charlotte Yarkoni, stated that the company's fees are only intended to offset operational costs and not take a share of partners' revenue.
Alphabet, Google's parent company, has yet to turn a profit from its venture in the cloud marketplace despite significant investment. In the second quarter of this year, the tech giant took a blow of $591 million in operating loss from the cloud segment on $4.6 billion in revenue.
