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Google lowers its cloud marketplace revenue share to 3% from 20%

Thomas Kurian, chief executive officer of cloud services at Google LLC, right, speaks as Alpna Doshi, group chief information officer of Philips, listens during the Google Cloud Next ’19 event in San Francisco, California, U.S., on Tuesday, April 9, 2019. It brings together experts from the industry to talk about cloud computing.

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Google is reducing the amount of revenue it keeps when customers buy software from other vendors on its cloud marketplace, as the top tech companies face increasing pressure to lower their so-called take rates.

According to an insider familiar with the situation, Google Cloud Platform will reduce its revenue share from 20% to 3%.

It’s the cloud group’s latest effort to become more competitive since Thomas Kurian joined as CEO in 2019 after a career at Oracle. Google, which trails Amazon Web Services and Microsoft Azure in cloud infrastructure, is trying to attract independent software makers to sell their products on Google’s cloud.

A spokesperson for Google told CNBC via email that “Our goal was to provide partners the best platform, most competitive incentives in industry.” We can confirm that we are working on a Marketplace fee change, and will have additional information to share soon.

In recent months, big tech companies have seen a decrease in the money that they keep on their platforms for business and consumer products. While competition plays a part, legal and regulatory issues are growing.

In July Google decreased the percentage it keeps from purchases through its Play Store, where consumers buy apps, to 15% from 30% for the first $1 million in revenue a developer earns each year.

Apple offered the same reduction to developers earning less than $1million annually this year. As part of a lawsuit filed by Epic Games, a judge in California ruled this month that Apple will no longer be allowed to prohibit developers from providing links or other communications that direct users away from Apple in-app purchasing.

Microsoft has lowered its percentage of revenue from Windows game sales to 12% instead of 30%.

On Google’s cloud marketplace, customers can find products from prominent software companies, including Confluent, Elastic, MongoDB and Twilio. It does not include products from prominent software companies like Accenture, Equifax and FactSet as well as Freshworks, Hewlett Packard Enterprise, Xilinx, Hewlett Packard Enterprise, Freshworks, Freshworks, Hewlett Packard Enterprise, Freshworks and Hewlett Packard Enterprise. These listings are available in the AWS Marketplace.

AWS, the market leader, charges a listing fee of about 5%, according to an estimate earlier this year from analysts at UBS. They estimate that AWS’s marketplace earns between $1 billion and $2 billion annually. Amazon refused to comment.

Microsoft said in July that it had cut its rate from 20% to 3%.

According to a Microsoft statement, “Our fees only serve to offset our operational expenses of billing customers and operating the marketplace,” Charlotte Yarkoni – chief operating officer cloud and artificial Intelligence at Microsoft – said. We aren’t trying to get a piece of the revenue from our partners. Our ecosystem allows us to sell solutions through partners, and not vice versa, like other cloud vendors.

Google’s cloud platform has not yet become a profitable engine for Alphabet, its parent company. In the second quarter, Google reported a $591 million operating loss from its cloud segment on $4.6 billion in revenue. Alphabet still relies on advertising to generate 82% of its revenues and a substantial portion of its profits.

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Mike Robinson
Mike covers the financial, utilities and biotechnology sectors for Street Register. He has been writing about investment and personal finance topics for almost 12 years. Mike has an MBA in Finance from Wake Forest University.