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Alphabet (GOOGL) to Serve App Developers' Interest With Fee Cut
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Alphabet’s (GOOGL - Free Report) division Google has taken a stern decision of reducing service fees that it takes from developers via its app store in a bid to promote interests of app developers of any size.
Notably, the company will reduce Google Play Store fees from 30% to 15% for the first $1 million in revenues developers earn a year. The app store fee cut will be implemented from Jul 1, 2021, onwards.
After exceeding the first $1 million in sales, developers will have to pay 30% service fees.
Reportedly, only 1% of developers generate more than $1 million in revenues and hence 99% of app developers on Play Store are expected to avail the app store fee cut and pay 15%.
Impact on Google
We note that the move follows the footsteps of Apple (AAPL - Free Report) , which also recently slashed its App Store commission fee from 30% to 15% on paid apps and in-app purchases for small developers who earn less than $1 million in annual sales.
Hence, Google ups its ante against the iPhone maker on the back of the scope that it is creating for bolstering its reach to app developers of any size.
Apart from this, the strategy of halving Play Store fees bodes well for Google, which has been under strict antitrust scrutiny by the regulators regarding charging developers a high app store fee.
However, the recent step of Google is expected to impact its proceeds from Play Store negatively. According to Sensor Tower data, the company generated $11.6 billion in fees in 2020 from Play Store.
Notably, $587 million would have been less in the above-mentioned amount if the latest app store fees cut policy would have been implemented last year.
Nevertheless, Google’s strong initiatives toward the advancement of its offerings for app developers remain noteworthy.
We believe that the latest move is likely to aid Google’s traction across app developers, which, in turn, will bolster its developer base.
This, in turn, will continue to sustain the strong momentum of Play Store and Android, which is expected to instill investor optimism on the Alphabet stock.
Zacks Rank & Stocks to Consider
Currently, Alphabet carries a Zacks Rank #3 (Hold).
Long-term earnings growth rate for Dropbox and Aspen is currently pegged at 40.88% and 40%, respectively.
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.
Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
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Alphabet (GOOGL) to Serve App Developers' Interest With Fee Cut
Alphabet’s (GOOGL - Free Report) division Google has taken a stern decision of reducing service fees that it takes from developers via its app store in a bid to promote interests of app developers of any size.
Notably, the company will reduce Google Play Store fees from 30% to 15% for the first $1 million in revenues developers earn a year. The app store fee cut will be implemented from Jul 1, 2021, onwards.
After exceeding the first $1 million in sales, developers will have to pay 30% service fees.
Reportedly, only 1% of developers generate more than $1 million in revenues and hence 99% of app developers on Play Store are expected to avail the app store fee cut and pay 15%.
Impact on Google
We note that the move follows the footsteps of Apple (AAPL - Free Report) , which also recently slashed its App Store commission fee from 30% to 15% on paid apps and in-app purchases for small developers who earn less than $1 million in annual sales.
Hence, Google ups its ante against the iPhone maker on the back of the scope that it is creating for bolstering its reach to app developers of any size.
Apart from this, the strategy of halving Play Store fees bodes well for Google, which has been under strict antitrust scrutiny by the regulators regarding charging developers a high app store fee.
Alphabet Inc. Price and Consensus
Alphabet Inc. price-consensus-chart | Alphabet Inc. Quote
Bottom Line
However, the recent step of Google is expected to impact its proceeds from Play Store negatively. According to Sensor Tower data, the company generated $11.6 billion in fees in 2020 from Play Store.
Notably, $587 million would have been less in the above-mentioned amount if the latest app store fees cut policy would have been implemented last year.
Nevertheless, Google’s strong initiatives toward the advancement of its offerings for app developers remain noteworthy.
We believe that the latest move is likely to aid Google’s traction across app developers, which, in turn, will bolster its developer base.
This, in turn, will continue to sustain the strong momentum of Play Store and Android, which is expected to instill investor optimism on the Alphabet stock.
Zacks Rank & Stocks to Consider
Currently, Alphabet carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Dropbox, Inc. (DBX - Free Report) and Aspen Group Inc. (ASPU - Free Report) . Both the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth rate for Dropbox and Aspen is currently pegged at 40.88% and 40%, respectively.
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.
Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
Click here to download this report FREE >>