Google slashes price of Cloud Marketplace fees to 3%
From a 20% revenue stream, Google slashed the cloud market fees to 3%. Reported by top channels and verified by Google Cloud themselves, the motive drives more sales with the cut. There is an ongoing pressure mounting up on app stores, and to tackle the challenge, Google is trying to match Microsoft’s revenue share terms. When fees are adjusted, they are taking a smaller cut from third-party software in the cloud marketplace.
The motive seems to concern the advertisement department as they are trying to spend less as it takes a significant cut from company revenue. Instead of taking a higher fee from customer’s and make it up with advertisements, the price reduction is something dedicated customers look out for. In the competitive market, where large companies already take a lower fee, it only makes sense to match that section to keep up.
When Thomas Kurian joined in 2019 as the CEO of its cloud group, he tried to bring competitive change. Amazon Web Services (AWS) and Microsoft Azure created a market after Google, giving them an edge to adequately research the market. According to statics, the US cloud providers are dominating in EU market.
Google spokesman to CNBC “Our goal is to provide partners with the best platform and most competitive incentives in the industry.” Additionally, “we can confirm that a change to our Marketplace fee structure is in the works.”
The COVID-19 affected every type of business, whether small or large, eCommerce or brick-and-mortar. Among these, big tech companies are decreasing the number of revenue shares by slashing percentages to keep the price affordable to customers, consumer apps or even business products. It reduced competition as customers realised their service providers cared enough to think about the economy and financial situation, trying to keep the market afloat.
Google recently decreased their app store fees from 30% to 15% in July with the requirement that developers should earn at least $1 million in revenue each year. It may seem like a lot, but counting the millions of users in single apps, ad revenue, and subscriptions is a sustainable number. That helped developers expand and upgrade quicker in this dire time.
Google’s cloud marketplace includes Confluent, Elastic, MongoDB, Twilio and similar top tech companies as customers. But Accenture, FactSet, Equifax, Xilinx have AWS marketplace listings. To acquire the equivalent level of customers, the competitive market needs to expand because they deal in millions.
Past July was an exciting time when these large cloud providers competed in a hard battle, which resulted in Microsoft taking a 3% cut directly from 20%.
Among many businesses owned by Alphabet Inc., Google Cloud is one of the less profitable segments. The future growth model is made available, and most earning report mirrors the same result.
The cloud market grew fourfold since early 2017 in Europe, which reached $8.8 billion in the second quarter (Q2). Cloud market Deutsche Telecom more than doubled their cloud revenue within this period, though their market share dropped. It decreased significantly from 27% to 16%, and as a result, other companies took note.
To make the Google cloud platform profitable and get out of the $591 million operating loss out of the cloud revenue is no easy task. They are trying to fill the void with $4.6 billion in company revenue gained in a year. Alphabet Inc’s primary source of income, ad revenue, remains 82% of the total profit for the company.
After several fines by antitrust laws for competitive business practice, Google is concentrating on other sources of revenues much profoundly.
