Google cuts cloud marketplace revenue share from 20% to 3%

Thomas Kurian, CEO of Google LLC’s cloud services, listened to Philips Group CEO Alpna Doshi at the Google Cloud Next ’19 event in San Francisco, Calif., On Tuesday, April 9th. It says that it is. 2019. This conference brings together industry experts to discuss the future of cloud computing.

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Google is reducing the amount of revenue it maintains when customers purchase software from other vendors on the cloud marketplace. This is because top tech companies are facing increasing pressure to lower their so-called take rates.

Google Cloud Platform has reduced revenue sharing from 20% to 3%, according to someone familiar with the issue that asked them not to name to talk about internal policies.

Since Thomas Kurian joined as CEO in 2019 after his career at Oracle, it’s Cloud Group’s latest effort to become more competitive. Google, which lags behind Amazon Web Services and Microsoft Azure in cloud infrastructure, is trying to attract independent software makers to sell their products in Google’s cloud.

“Our goal is to provide our partners with the best platforms and the most competitive incentives in the industry,” a Google spokeswoman told CNBC in an email. “We can see that the marketplace pricing changes are underway. We’ll let you know soon.”

Big tech companies in recent months have reduced the amount of money they hold on their platforms, whether they’re consumer apps or business products. While some of the pressure is related to competition, regulatory and legal concerns are also rising.

In July, Google reduced the percentage of consumers buying apps from the Play Store from 30% to 15%, making the first $ 1 million in revenue that developers earn each year.

Also this year, Apple offered app developers the same savings, with annual sales of less than $ 1 million. As part of a lawsuit filed by Epic Games, a California judge this month ruled that developers would no longer be allowed to ban users from providing links or other communications that keep users away from Apple’s in-app purchases. Was given.

Meanwhile, in August, Microsoft reduced its share of game purchases from the Windows app store from 30% to 12%.

On Google’s cloud marketplace, customers can find products from well-known software companies such as Confluent, Elastic, MongoDB, and Twilio. However, none of the companies listed on the AWS Marketplace include Accenture, Equifax, FactSet, Freshworks, Hewlett Packard Enterprise, and Xilinx.

AWS, the market leader, will charge a list fee of about 5%, according to estimates by UBS analysts earlier this year. They said the AWS Marketplace generates about $ 1 to $ 2 billion in annual revenue. Amazon declined to comment.

Microsoft said in July that it reduced that percentage from 20% to 3%.

“Our charges only offset customer billing and billing, and operating costs to operate the market,” said Charlotte Jarkoni, Microsoft’s Chief Operating Officer for Cloud and Artificial Intelligence, in a statement. I am aiming for it. ” “We are not trying to steal some of our partners’ revenue. Our ecosystem, unlike other cloud vendors, is a channel to help our partners sell their solutions. Not the other way around. “

Google hasn’t yet turned its cloud platform into a profit engine for its parent company Alphabet. Google reported an operating loss of $ 591 million from the cloud segment in the second quarter with revenue of $ 4.6 billion. Alphabet still expects to advertise about 82% of its revenue and virtually all profits.

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Google cuts cloud marketplace revenue share from 20% to 3%

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