Google Play Business Model | How Does Google Play Makes Money?

PV Vyshnavi PV Vyshnavi
Jan 4, 2022 11 min read
Google Play Business Model | How Does Google Play Makes Money?

Google is one of the acclaimed multinational conglomerates in the world, as it runs multiple businesses under a single brand. Its most successful business sector is Google Play which was also known as Android Market, the platform is one of the top digital distribution services and is a brainchild of Google.

Google play was initially launched in October 2008 and then re-launched in March 2012 after combining the Android market and Google together. Google Play is the official app store for every device that runs on an android operating system. The platform allows users to search and download apps that are designed and developed for android devices.

It also acts as a digital media store that offers music, e-books, movies and TV programs. The apps can be downloaded directly from Google play, while the platform allows its app developers to make apps that are free and charge a fee. The platform had over 82 billion app downloads just in 2016 and had over 3.5 million Android applications available in 2017.

About Google
What is Google Play Store?
What are the Services Provided by Google Play?
Google Play Business Model
How does Google Play Make Money?
How much does Google Play Make?
Google Play Developers Support System
Google Play Safety
The Lawsuit against Google Play Store
FAQ

About Google

With the rise of the Internet, one organisation that has remained constant and improving from the very beginning is Google. It has managed to do what most people would say is impossible. It did the exact same thing that its slogan says and in every case, better than that. They proudly say that their mission is to โ€œOrganise the worldโ€™s information and make it universally accessible and usefulโ€. Simple it may sound but it is a herculean task.

The Google story begins in 1995 at Stanford University. Larry Page was considering Stanford for grad school and Sergey Brin, a student there, was assigned to show him around. Little did they know that they would lead the information revolution afterwards. Google (of course) outgrew the garage and they eventually had to move to its current headquarters (also known as โ€˜The Googleplex') in Mountain View, California.

As Google grew, they began hiring more and more and made the company truly big in every sense. They launched Google Play Store, Drive and all of Google suite with one Email ID. So, with one ID people could use all of Google, be it Document creating and editing, spreadsheet updating and sharing or anything over the internet.

What is Google Play Store?

Google play store is one megastore in your smartphone. We mean it quite literally. Google play store is a subsidiary of a service that is provided by Google to its android users. The store can be accessed instantly if you have an android device, in fact, it comes pre-installed on every new smartphone. It is important to note here that there are more than 2.8 billion android users in the world as of now. This is a huge number and Google caters to them all.

Google play store is a marketplace for Apps, Music, Movies, Books, TV Shows and many more. It is a single place you need to get almost all the work done that you want from your device. Be it work-related apps, professional suites or any sort of craving for entertainment, you will find it all on the Google play store.

Google play store strives to create an environment that a user wants, it does it so well. Not only this, apart from being a perfect yet simple place for users, it also helps developers get the right audience for their work.

What are the Services Provided by Google Play?

Some of the main services that Google Play offers are:

Google Play Games

Google play games were launched in 2013, and since then it has been an online gaming service for Android devices.

Google Playbooks

Google playbooks are one of the leading e-book distribution services as it is available in 75 countries. It currently has more than five million eBooks available for purchase and offers the user an option of uploading over 1000 of their own eBooks in the form of PDFs.

Google TV

This is the Video-on-demand platform of Google that offers a wide range of movies and TV shows that can be purchased or rented. The platform was earlier known as Google Play Movies & TV and has its movies being available in 110 countries while its TV shows are available only in a select few countries.

Google Play Pass

This platform was launched in 2019 and is a games and app subscriptions services that are available only in America. Google Play Pass is invitation-only for app developers.

Google Play Music

This app allows its user to listen to and download music. Currently, the app has over 15 million subscribers.


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Google Play Business Model

According to Google Play, the app developers receives over 70% of the app price, while the other 30% goes to Google Play as they are the distribution partner and as a part of operating fees. The platform also allows the developers to make sales on their app, on the basis that it informs its users when the sales end. The application developers can also release an early version of their app to a certain group of users or even allow their users to pre-order the apps before they are released.

For regular subscription-based payments, it charges 30% for the first-year subscription consumer pays and then the app developers can continue paying 15% from all subsequent years. This model is similar to the business model of another app store like the Apple app store. Where the app developers pay some money to the app store in order to hoist their app and get the remaining amount of money from their user purchases.

A Google Play advertisement

Revenue Model of the Google Play | How does Google Play Make Money?

There are two main ways Google Play makes money

Advertisements

Google allows its users to promote apps on its platform by using certain keywords that are shortlisted by the app developers. So when a user is searching for a certain keyword they can get your app listed on the top.

Service Fee

The revenue source of the Google play store is simple and it is primarily a Service fee from developers.

If a developer wants to sell an app on the Google play store then Google asks for a Service fee from the developer. Quite anything or service that developers would want to sell, it can be a subscription service too. However, any in-app purchase is not commissioned by Google.

Google Play Store Fee
Google Play Store Fee

Google also takes a 30% cut of the revenue made on an android app from the developers.

This should be quite clear by now that Google only earns money when developers charge something from the customers. So, the revenue model works only when developers are making money. This creates a hit and takes effect on the whole relationship. This also ensures that both parties are putting efforts to be more efficient and convenient.

How much does Google Play Make?

On 30th August 2021, the platform disclosed the revenue of the platform for the first in 13 years. According to the declassified documents of Google play store, the total revenue of the platform is over $11.2 billion (Rs. 82,000 crores) in 2019. This amount is said to include the price of the app (which it charges 30% of), additional in-app purchases and revenue generated via advertisements on the Play Store app.

This information was disclosed because of an antitrust lawsuit that was filed against Google Play store by several districts and states in America claiming that Google Play Store exercises a monopoly over application distribution. Out of the $11.2 billion total revenue, over $8.5 billion is the gross profit of the app, while the operating income of the Google play store is $7 billion.

Google Play Developers Support System

If you are a developer for an app, all you need is an audience for your beautiful creation. Google play does that work for you so that you can focus on more important things for your application. It offers a ready-made market for apps and games. They have a capacity of about a little over 2 billion users monthly. With this huge number of people transacting with Google every month, it is going to be a booming opportunity if you can tap this market.

If you are a developer who wants to distribute an app for free to the globe then you donโ€™t have to pay a single dime. Yes, you read that right, Distribution is fully free for the developers who do not charge for their apps and games.

Moreover, Google also provides full support to each and every developer. Be it on the edge of developer training, user data and up to date information, helping tools and more. Let me tell you precisely how Google helps developers in various domains, they are,

Distribution

Google play store provides the technical interface to distribute apps made by developers to the world. They have billions of monthly active users. If a developer is able to get his/her app on the Google play store, he/she can get the benefits of a global market. This will jumpstart revenue for them and value creation for its users.

Development and Support

Google provides state of the art facilities to the developers. The range of support can start from quality control checks, application testing, user analytics to its Android studio, play console and Android software development console. All these supplements allow developers to make their work better and provide better value.

Compliance

Google play store provides a full-fledged ecosystem for a developers app. They can categorise, target, even regulate the market for their apps. This helps them to target the right audience and market, this compliance is a good help for developers who know their work. This ensures proper distribution for their product.

Payments

Developers who make their app accessible after a purchase can totally rely on Google play as a mediator for efficient distribution. Google ensures utmost security and safety for payments of any sort. They also act as a currency converter for apps that are famous worldwide, like Spotify or Youtube.

All these add ons make developers make better apps and thus share more of the market. This improves the market as well as the revenue for developers. Thus google play makes the perfect ecosystem for developers to foster their growth. With the right tools in handy, developers will do their best work for their users.

Google Play Safety

While Google connects all the android users for the love of apps, they do it very securely. With state of the art infrastructure in the face of security and safety, Google sets new parameters for privacy. Every app in the Google play store is scanned, tested and only then is added to its app library. They scan more than 100 billion apps every single day to ensure no security leaks. This provides users with enough data for potential threats and trust for Google.

Google Play Protect
Google Play Protect

In addition to the everyday checks, every app is put up on the store only after it clears the compliance parameters set by Google experts. They leave no stone unturned.

Some of the parameters that are set by Google are listed here -

Intellectual property security

Many applications try to use other appsโ€™ goodwill to generate revenue by deceiving their users. Google has strict standards to avoid such deceiving. They do not permit apps that are similar to other apps in any domain, thus they cannot use other brands to mislead users. This protects the intellectual property rights of genuine apps and services and acts as a wall of protection for brands as well as for users.

Content restrictions

Google knows very well that the internet is filled with good stuff as well as garbage of all sorts. They do not allow any sort of content that depicts any sort of abuse, harmful products, sexual content, profanity, hate speech and any sort of inappropriate content. This filters the Google play store and makes it accessible to everyone.

Abuse and deception

As mentioned in the earlier point, Google has hard parameters for all sorts of apps. It does not allow any app that includes deception, abuse and any malicious information. These kinds of apps misuse the personal data of users and the data can be used for multiple bad intentions. Thus, to prevent this, Google has found a solution. Every appโ€™s developer has to submit to Google about what data the app collects and how the data is used and utilised for app functioning. This makes the developer more accountable on the basis of customer service and privacy.

Application functionality

The developer has to inform Google about the minimum requirements that are needed to run the app. This is in order to respect the customer user experience that adds to the overall experience of the application. This also reveals spam (if any) on the developerโ€™s side.

Store listing

All the app developers have to include a crystal clear definition of everything about the app, if they fail to do so and any information is wrongly listed, then Google has all the rights to unlist the app from the store. Any misleading data or promotions can lead to a permanent ban of an app.

Even after all the checks and permits, If a user finds anything wrong with an application then he/she can report complaints. Google has made it very convenient to report abuse across all its services. Developers can also flag some apps that violate their intellectual property rights. This ensures a smooth ecosystem for everyone.

Google Play Store Flag as inappropriate
Google Play Store Flag as inappropriate

The Lawsuit against Google Play Store

The case was filed by attorney generals from 37 states and districts of America because they taught that the platform was cutting down the profits of app developers and taking a huge commission on sales. The lawsuit also says that Google is using illicit measures in order to maintain its monopoly. The next trial is expected to be in late 2022.

According to Google, however, this case is nothing but a meritless lawsuit and said that the data mischaracterizes its business. Google also has other lawsuit filed against it by Epic Games, which are the creator of a popular game known as Fortnite.

Epic Games along with other app developers are separately suing Google because they think that the platform is taking over 30% of the fee for every digital good sold as in-app purchases and generating huge amounts of profits. According to Epic Games, the company came up with a Premier Device Program through which it offered a share of Google Play Earnings to other big companies like LG and Motorola.

Conclusion

We learnt that Google is a pioneer in technology and how one of its subsidiaries โ€œGoogle play storeโ€ is here to help every user and every developer. Google was changing how people consume information and now is managing every app that you can think of.

Google play store works as a perfect ecosystem for developers and users on all the upfronts, be it security, safety, privacy and intellectual rights. We learnt how the Google play store earns revenues.

Not only this, Google is striving every day to be the better maintainer of almost every device we use. From the Digital well-being feature to the whole entertainment pocket industry. It is no doubt that its innovation leads the technological revolution in the world. Be it on the device on our palms to the satellite outside this earth. Google knows how to make the internet a better and a convenient place for everyone.

FAQ

How does the Google Play store make money?

According to Google Play, the app developers receives over 70% of the app price, while the other 30% goes to Google Play as they are the distribution partner and as a part of operating fees.

Is Google Play profitable?

Yes, Google Play generated $11.2 billion in revenue from its app store in 2019.

What percentage does Google Play take?

Google Play store takes a 30% cut and, 70% goes to the developers.

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