As a seasoned analyst with years of observing the tech industry’s ebb and flow, I can’t help but feel a sense of déjà vu when reading about Microsoft’s ongoing struggle with Google in the mobile arena. My professional journey has taken me through the rise and fall of Windows Phone, leaving me with a lingering question: When will the tech giants learn that trying to compete with Apple and Google on their own turf is like attempting to out-pigeon a falcon?
In the wake of the Windows Phone era, Microsoft finds itself needing to act like both Google and Apple to gain a foothold in mobile computing. This is evident in their offerings such as Microsoft Edge, Microsoft Copilot, or Xbox Cloud Gaming. As expected, these tech giants are actively working to thwart Microsoft’s progress on smartphones.
Currently, it’s challenging for third-party developers to thrive on the Android platform due to its present structure. Notably, entities like Microsoft, Epic Games, and Samsung have contemplated creating their own app stores as a means to bypass Google’s charges. Nevertheless, since most people obtain their Android apps from Google Play, it’s highly unlikely that any third-party app store on Android will gain significant popularity. Regardless, these parties continue to persist in their efforts. Microsoft, for instance, has postponed the launch of its Android app store for Xbox mobile games, awaiting court rulings in the U.S. concerning Google’s regulations regarding Android app distribution.
Yesterday, Sarah Bond posted on BlueSky about the current situation regarding the Xbox mobile app store for Android devices. She expressed that at Xbox, they aim to provide players with more options on where and how they can play and purchase games, including doing so directly from the Xbox app. Bond explained that their goal is to initially make these features available through the Google Play Store in the U.S., while other app stores adjust to meet consumer needs. As anticipated, Google is not passively accepting Microsoft’s endeavors.
Google’s legal team has been given extra time by U.S. courts to prepare their appeal case, which means the release of certain features has been postponed. In his statement, Bond explained, “Due to a temporary halt in proceedings caused by the court’s recent decision, we are unfortunately unable to roll out these features at this moment. Our team has already developed and is waiting to deploy them as soon as the court reaches its final verdict.
As a tech enthusiast here, I’m sharing some insights from Google (via PureXbox). They’ve stated, “Microsoft has had the capability to enable Android users to play and buy Xbox games directly through their app. However, they’ve chosen not to do so.
Google’s legal disputes with Epic Games prompted Fortnite’s CEO, Tim Sweeney, to offer his own perspective: “Google’s statement is misleading,” he tweeted, adding, “It’s disgraceful. They are fully aware that the 30% fee they charge is significantly more than the profit from game streaming. This is obvious because Google themselves spent hundreds of millions developing the unsuccessful Stadia gaming platform.
Oof, as the kids say. Let’s break down what’s actually going on.
And what’s the bottom line?
Tim Sweeney’s assertion that Google’s statement is misleading holds water. What the company fails to disclose is that Microsoft and Epic Games are choosing to bypass the Google Play model due to its high 30% fee on software sales. It’s important to note that Xbox, PlayStation, and Nintendo also levy a similar percentage on their hardware platforms; however, these devices are either sold at cost or with minimal profit margins. The purpose of this cut is primarily to sustain the platform. Contrastingly, Apple not only charges developers a 30% fee but also sells its hardware at a premium price, essentially reaping the benefits and consuming them simultaneously.
But wait, Google itself doesn’t actually deliver its own hardware for the most part, so there’s no margin to speak of there generally speaking. Its Pixel phones have a vanishingly small global footprint, and its own Android Pixel tablet range has reportedly been cancelled. The Android business hinges almost entirely on software and services rendered through Google Play on third-party devices, while also feeding its mammoth ad empire (which, by the way, the United States recently described as a monopoly). Google requires its hardware partners to preinstall its apps and services on these handsets to gain access to Google Play, while also controlling the default apps on top too. This gives it a huge advantage when it comes to data powering its search and ad empire.
The intermediary role that Google plays has frustrated developers such as Microsoft and Epic Games, who find it challenging to establish new ventures, like cloud gaming, due to the 30% commission on app revenue they have to pay. By 2024, cloud gaming is predicted to be unprofitable, and one factor hindering its growth is Google’s policy that does not allow in-app purchases on Google Play. Additionally, without a listing on Google Play, discoverability will be limited, resulting in higher user acquisition costs for Microsoft.
Despite my strong dislike for Google, particularly due to their anti-competitive practices towards Windows Phone, it’s challenging not to understand their perspective to some extent. The U.S. Department of Justice has labeled Google’s ad business as a monopoly, which means they might need to find alternative ways to generate profit from Android if they’re compelled to alter their own ad business. It would be careless of them not to resist this situation, considering that they could potentially lose two revenue sources for Android instead of just one, if we consider the devil’s advocate perspective.
Microsoft’s policy of taking a 30% commission from Xbox game developers primarily focuses on keeping the cost of Xbox Series X|S consoles low for consumers. In the future, Microsoft may allow third-party marketplaces such as Epic Games Store and Steam to sell games on Xbox consoles, but this change might take several years to implement. Notably, Microsoft charges a lower commission, approximately 12%, for PC games sold through its own store, compared to the standard 20-30%.
In simpler terms, I believe that Windows’ open platform approach has been more advantageous for consumers compared to iOS and Google’s Android, because Microsoft doesn’t charge a fee (0%), which enables innovators like Steam to grow without restrictions. While Android is relatively open, allowing for side-loading and pre-installed OEM app stores, Google maintains a tight control over Google Play, promoting its own products at the cost of others. For instance, the Kindle book app on Android was pressured to eliminate in-app purchases by Google, while Google still sells books through Google Play itself.
Ultimately, the outcome lies with the courts, but perhaps the whole situation could have been prevented if Microsoft had persisted in developing its mobile platform, specifically something similar to what we knew as Windows Phone. That, in essence, is the crux of the matter!
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2024-11-28 17:09