Google Cloud plans to reduce the amount of revenue it keeps when customers buy software from other vendors via its cloud marketplace.
The cloud arm of the tech giant is cutting fees it takes from 20% to just 3%, according to CNBC sources.
The company has confirmed it is planning to make a change to its marketplace revenue fees but said it isn’t yet ready to release the exact figures. However, it’s the latest in a series of efforts under CEO Thomas Kurian to make Google a bigger player in the cloud services industry in a bid to catch the likes of AWS and Microsoft Azure.
The fees that large tech firms charge for selling on their platforms have been under heavy scrutiny of late, whether that’s consumer apps or business products. Some tech giants have been forced to revisit their fees due to regulatory action; Apple, for example, recently reduced the percentage it takes from app developers that sell apps from its Play Store, following its court battle with Epic Games.
However, Google Cloud’s planned reduction is about attracting more companies to its marketplace and, ultimately, boosting its competitive advantage.
“Our goal is to provide partners with the best platform and most competitive incentives in the industry,” a Google Cloud spokesperson told CloudPro. “We can confirm that a change to our Marketplace fee structure is in the works and we’ll have more to share on this soon.”
Google Cloud, is still an unprofitable segment of the Alphabet business, according to its most recent earnings report, but it has made changes under Kurian to enable future growth, according to Forrester cloud analyst Tracy Woo.
“Thomas Kurian brought to Google what they needed, which is more enterprise experience,” Woo tells CloudPro. “He very quickly built out their vertical-specific solutions which is something that other cloud providers are doing as well. This was a good move as it will likely help lower the barrier to adoption by some of the major enterprises. They’ve also very aggressively pursued the hybrid cloud space both in services as well as in management. It’s been an important area that still has no ‘killer app’ and if they’re successful can help them to win more of the market share.
“Other areas that he’s helped streamline are its sales teams and process to require less overhead and approval to provide customers with better pricing or discounting. And within his time there he’s managed to grow the cloud business revenue. Culturally, there may have been concerns about Kurian being not ‘Google’ enough but his presence has shown to have a positive impact on the organisation.”