Google will soon reduce the share of revenue it takes when enterprise apps are sold through its online marketplace.
Google only has a minor share of the cloud infrastructure market, but it is gaining pace alongside Microsoft Azure to catch up with the dominant Amazon Web Services (AWS).
According to CNBC, Google Cloud Platform will reduce the commission it takes from Google Cloud Marketplace app store sales from 20% to 3%. Google’s Marketplace is used to distribute software-as-a-service apps to enterprise customers.
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Google hasn’t announced the change but confirmed to CNBC that it is changing its Marketplace fee structure and will have details soon. It didn’t confirm the amount of the reduction.
That business is not as big as its for example the Play Store for Android apps and digital content, but Google Cloud Platform is growing.
Google Cloud took $4.63 billion in sales for Q2 2021, up 54% from $3 billion the year prior. It still made an operating loss of $591 million, but it was smaller than the loss of $1.43 billion a year prior. It’s a small business compared to search and YouTube ads, which totaled $50.4 billion in that quarter.
Google’s chief financial officer, Ruth Porat, said Google and Alphabet will “continue to invest aggressively” and expand channel sales, products and compute capacity.
AWS still leads with a 32% share of spending, followed by Microsoft Azure’s 19% and Google Cloud’s 7%. Google is focusing on machine learning, analytics and data management.
Apple and Google have reduced platform commissions for their respective app stores for businesses that earn less than $1 million a year. AWS has also reduced commissions for developers who earn less than $1 million a year.
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Google also announced new terms in its Standard Contractual Clauses (SCCs) for European customers moving data across the Atlantic. The changes affect Google Cloud Platform, Google Workspace. The updated contract changes by “assuming all the responsibilities imposed by the new SCCs”.
Aiming to navigate EU regulatory challenges, Google is teaming up with the German company T-Systems to jointly run European Sovereign Cloud on the GCP, which allows T-Systems to control security. It also pledged to spend €1bn on cloud infrastructure over 10 years in Germany.