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Google originally did not want to make any money from Android's app store

Google originally wanted to only collect a small charge to cover costs of handling and billing on the Android Market.
By

Published onNovember 15, 2023

Google Play Store app on smartphone UI stock photo (1)
Edgar Cervantes / Android Authority
TL;DR
  • Back in 2008, Google only wanted to collect a small charge to cover the costs of handling and billing on the Android Market.
  • The company then settled on keeping 5% of the app store proceeds as revenue share.
  • In contrast, by H1 2020, the Google Play Store accounted for a whopping $4.4 billion in operating profits.

When we think of Android phones today, we don’t necessarily think of phones running stock, barebones Android. Instead, we think of phones that have access to a wide variety of third-party apps and games that can serve all of our present needs, and for that, we need the Google Play Store, which is part of Google Mobile Services. The Play Store has become an essential part of the Android experience, but it seems even Google didn’t expect it to turn out this way in the early days of Android.

Back in 2008, when the Google Play Store was known as the Android Market, the then-Head of Android Developer Ecosystem, Mr. Eric Chu, mentioned in an internal FAQ that “Google will not be operating the Android Market as a profit center,” and that Google will “collect a small charge to cover costs of handling and billing.” Google ended up keeping 5% as revenue share, while 25% went to carriers and 30% to developers.

This came to light during the proceedings of the Epic Games vs Alphabet lawsuit that is currently underway, as reported by The Verge.

The situation has obviously changed over the decade, and the lawsuit has also brought to light more recent figures. In 2020, Google Play had a 65% operating margin, accounting for a whopping $4.4 billion operating profit in H1 2020. This figure is up 33% from H1 2019, indicating rapid growth.

Even as an enthusiast who has been around since Android Froyo, Android’s humble beginnings still catch me off-guard as I am used to seeing Android basking in all of its more recent grand successes. The fact that Google did not originally intend to make money off the Android Market shows how even they underestimated the potential of Android (and the Android Market/Google Play Store) to grow into the operating system behemoth it is today.

Who would have thought in 2008 that the smartphone market would become an Android-iOS duopoly? Certainly not me, and probably not even those working on these products.