Most of the app developers have demanded Google to reduce their tax deductions. However, Sundar Pichai stands still in his decision of not reducing their 30% tax slab on Play Store Sales.
Today at the Alphabets Earning’s call with the investors, Google made it clear of not altering their tax slab on Play Store; despite the massive cry from the developers from around the globe. Sundar Pichai, the CEO of Google made it clear that they have no plans of altering the usual 30-70 splitting between Google and the developers.
Google vs Fortnite | 30% Tax Slab
Replying to a question, Sundar Pichai made it clear by saying that, “Thousands of developers rely on it for safe and seamless distribution of their games to billions of Android users worldwide. And we invest a lot in our infrastructure to continuously make sure the overall experience is safe and results in high engagement for the developers back”.
Sundar Pichai also added by saying that, “ So, I think there’s a value exchange there. And it’s been the industry standard. And so I think we’ll continue down that path but obviously, always adapt to where the market is”.
Developers well criticize the 30% tax slab around the globe. The Fortnite game, which became viral just the previous year, i.e. in 2018; decided of skipping the Google Play Store to escape their 30% tax slab.
On the other hand, Tim Sweeney, CEO of Epic Games blamed the “Economics of the Store’s ecosystem,” their reason for skipping the Play Store.
Tim Sweeney further added to his statement that “There’s typically a 30/70 split, and from the 70%; the developers pay all the costs of developing the game; operating it; marketing it; acquiring users and everything else. For most developers that eats up most of the majority of their revenue. We’re trying to make our software available to users in as economically efficient a way as possible. That means distributing the software directly to them; taking payment through Mastercard; Visa; Paypal; and other options and not having a store take 30%”.
This is not the issue with just Google; Apple has also received similar demands to reduce their tax slab on apps and in-app sales on Apple Store. Netflix has blocked all the new users from signing up via Apple’s App store; as a symbol of protest against heavy tax charging.
Apple also charges around 30% of the developers. However, Apple’s shares reduce by 15% once the customer makes recurring payment for the application, at least once a year.