Key Highlights:
- Google is decreasing the amount of income it retains when users purchase software from other suppliers on its cloud marketplace.
- In recent months, major technology companies have reduced the amount of money they keep on their platforms.
- Alphabet’s main firm, Google, has failed to transform its cloud platform into a profit generator.
Google slashes revenue
Google is decreasing the amount of income it retains when users purchase software from other suppliers on its cloud marketplace, as the biggest tech firms face increased pressure to decrease their so-called take rates.
According to a person familiar with the situation who requested not to be identified in order to discuss internal procedures, Google Cloud Platform is reducing its percentage revenue share from 20% to 3%.
It is the cloud group’s most recent attempt to become more competitive after Thomas Kurian took over as CEO in 2019 following a stint at Oracle. Google, which lags behind Amazon Web Services and Microsoft Azure in cloud infrastructure, is attempting to get independent software developers to sell their goods on its platform.
“Our goal is to provide partners with the best platform and most competitive incentives in the industry,” a Google spokesperson said. “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.”
Google follows big tech companies
In recent months, major technology companies have reduced the amount of money they keep on their platforms, whether for consumer apps or commercial goods. Some of the pressure is due to competition, but there is also an increase in regulatory and legal issues.
Google reduced the proportion it retains from sales made through its Play Store, where customers buy applications, to 15% from 30% for the first $1 million in income a developer generates each year in July.
This year, Apple also granted the same discount for app developers with yearly sales of less than $1 million. A California judge decided last month that Apple will no longer be able to prevent developers from providing links or other communications that drive consumers away from Apple in-app buying as part of a lawsuit brought by Epic Games.
Meanwhile, Microsoft reduced the proportion of revenue it retains from game purchases made through its Windows app store to 12 percent from 30 percent in August.
Google fails to get profit from cloud platforms
Customers may discover goods from well-known software firms such as Confluent, Elastic, MongoDB, and Twilio in Google’s cloud marketplace. It does not, however, include items from businesses such as Accenture, Equifax, FactSet, Freshworks, Hewlett Packard Enterprise, and Xilinx, who all have listings in the AWS marketplace.
Alphabet’s main firm, Google, has failed to transform its cloud platform into a profit generator. Google reported a $591 million operating loss from its cloud division on $4.6 billion in revenue in the second quarter. Alphabet still relies on advertising for around 82 percent of its revenue and nearly all of its earnings.
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