Google Cloud Platform (GCP) cuts the revenue it keeps when users buy software from third-party sellers on its cloud marketplace. With this, Google attempts to become more competitive, as it still lags behind Amazon Web Services (AWS) and Microsoft Azure.
According to CNBC, the company will reduce its “take rate” from 20% all the way down to 3%. A Google spokesperson reported in an email to CNBC: “Our goal is to provide partners with the best platform and most competitive incentives in the industry.”
Google consistently ranks third among cloud providers, with AWS and Microsoft taking first and second place, respectively. In Q2 of 2021, Google Cloud brought in $4.62bn. However, Amazon led with $14.8bn, and Microsoft followed with $10.34bn.
In terms of take rates, AWS currently charges 5%. It looks like Google followed Microsoft’s lead—earlier this year Microsoft also went from 20% down to 3%. Both companies appear to be cheaper alternatives to Google.
Playing Catch Up
The big three have a wide range of cloud offerings—from managed hosting to cloud storage. However, AWS and Microsoft outpace Google in terms of adoption by third parties. In addition, the providers are reducing the take rates in several other areas, not only cloud.
Google also cuts its takes from Google Play sales from 30% to 15% for the first $1 million a developer makes a year. Similarly, Microsoft reduced the percentage it keeps from Windows’ game sales from 30% to 12%.
Many specialist cloud services, like backup storage, and more niche subtypes, such as photo cloud backup storage, use AWS, Azure, and GCP’s infrastructure. By cutting its take rates, GCP hopes to win over more of them.
A decrease from 20% to 3% is formidable. It remains to be seen how this will pan out in the future. Even if Google doesn’t manage to poach clients from its rivals, the rate at which cloud adoption is proliferating means it won’t have to wait long for new adopters.