Avoiding the app store monopoly: How developers can cut costs and reach new users, without Apple and Google
Three years ago, game developer Epic Games sued Apple and Google for breaking antitrust laws. The move was unprecedented in the mobile industry, as the maker of some of the most popular video games took on two of the world’s largest tech companies – in what many observers described as a David and Goliath style legal battle.
The subjects of the lawsuit were the 30% cut both Apple and Google take from in-app purchases made within their app stores, and prohibiting third-party billing processing. The 30% cut is a tactic both companies introduced with the advent of their app stores over 15 years ago, and has been one of the primary drivers of growth for both companies in recent years. But Epic Games is far from the only company to contest these fees, with Facebook and Spotify also speaking out in recent years against such high costs. For subscription-based or e-commerce apps, or ones that rely on in-app purchases like many gaming companies, this 30% can have a huge impact on their bottom line.
In the Epic Games saga, Apple ultimately ended up removing Fortnite from the App Store, prompting widespread discussion on the legality of these “digital gatekeepers”. But despite rising sentiment among app developers, consumers and regulators that the fees are too high and alternative billing processes should be allowed, Apple and Google have done little themselves to change their decade-old policy. Instead, EU policy makers have stepped in with the introduction of the Digital Markets Act: a set of rules targeting digital gatekeepers, forcing them to conduct their business in a fair and non-discriminatory way.
The policies are particularly aimed at services such as app stores. As a result, Apple will start allowing alternative app download sources, while Google will stop blocking mobile OEMs in the EU shipping their devices with the OEM’s native app store installed by default. These regulations mean it’s never been a better time to start working with mobile OEMs and benefit from the power of alternative app stores.
A better way with mobile OEMs
Mobile Original Equipment Manufacturers (OEMs) are taking deliberate steps to offer an authentic and safe alternative to Apple and Google’s strict policies. Companies including Xiaomi, Vivo and OPPO directly distribute applications to their customers via their dedicated stores – without requiring developers to pay any fees outside mainland China. This is a massive opportunity for apps to save costs, implement new billing solutions, and reach millions of untapped consumers all over the world.
Billing systems differ slightly per OEM. For Huawei’s AppGallery, for example, developers need to integrate Huawei’s billing solution into their app. But at this stage, Huawei is keen to encourage as many developers as possible to use the AppGallery, and are less strict about applying the same 30% cut as Google and Apple.
Xiaomi, OPPO (realme and One Plus) and Vivo also offer their own billing solutions to help developers easily publish within their stores. However, there is no obligation to adopt any particular billing system – helping you retain freedom of choice and avoiding complex and long-winded developer work. Developers can even use Google Play’s solution within these app stores if they wish, with the caveat that they will be subject to the 30% cut. To help save these costs, developers can either negotiate with the respective OEM about a custom deal, or implement one of the many other payment solutions out there.
As alternative app stores continue to gain traction within Europe – particularly with the upcoming implementation of the Digital Markets Act – it’s expected that mobile OEMs will also change their billing solutions. This could mean either making their proprietary payment models mandatory, or continue allowing the use of third-party payment solutions in return for a smaller revenue share. As for the India market, the ecosystem will have to wait and watch to evaluate the repercussions of the Digital Markets Act and whether or not mobile OEMs in India choose to change their billing solutions.
Pre-install deals: A direct route to downloads
For developers looking to get their app in front of as many customers as possible, pre-install deals – particularly factory preloads – offer one of the most effective, exclusive, and direct routes to do so. These are apps that are already installed on brand-new smartphones for users activating their mobile device for the first time.
Factory preloads are especially valuable for larger developers with the time and financial resources to manage effective deals with OEMs. But they do require a significant long-term commitment, so if you’re a smaller developer, consider looking into dynamic preload deals instead. These are offered by Xiaomi, OPPO and Vivo, who can configure which apps will be recommended in the Google portal and which group of devices to reach and target. This is done via Google’s auto-install functionality – the Google Play AutoInstall (Google PAI) – within mobile OEMs that automatically downloads apps from the Play Store.
There’s no denying that dynamic preload deals offer more flexibility in terms of commitment, pricing and testing – but be aware that you’ll once again be subject to Google’s 30% cut. However, given current sentiment within the industry, it’s only a matter of time until OEMs introduce their own dynamic preload solutions to rival Google’s PAI. This will offer developers the best of both worlds: freedom of choice when it comes to selecting a billing solution, and flexibility when running preload campaigns.
As adoption of mobile OEMs continues to grow, and new regulations aim to help diversify the app store marketplace, it’s never been a better time to integrate alternative app stores into your marketing mix. There is a wealth of opportunity for marketers who tap the vast distribution opportunities offered by alternative app stores – and it’s only set to get bigger in the years to come.
(The author is Ashwin Shekhar, Co-Founder, AVOW, and the views expressed in this article are his own)
