Google Cloud Platform to cut marketplace fees in a bid to attract more third-party vendors

Aims to provide most competitive incentives in the industry

Google Cloud Platform (GCP) plans to lower the fee it charges third-party vendors that use its cloud marketplace to sell their own services or software.

A source familiar with the matter told CNBC that the platform will slash its percentage revenue share from 20 per cent to just 3 per cent in order to attract more companies to its marketplace.

The move is the latest in a series of efforts under CEO Thomas Kurian who joined the company in 2019 after a career at Oracle. Kurian wants to make the Google's cloud division a bigger player in the sector, able to catch up the likes of Amazon Web Services (AWS) and Microsoft Azure.

"Our goal is to provide partners with the best platform and most competitive incentives in the industry," a Google Cloud spokesperson said in a statement to CNBC.

"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."

The move mirrors recent changes in the world of mobile apps, where competition is driving down prices.

In recent years, big tech firms' commissions charged for selling on their platforms have also been at the centre of several legal disputes.

In July, Google halved the service fee it charges from developers who sell their mobile apps via the Google Play Store for Android. App developers now pay a 15 per cent commission instead of 30 per cent on revenue generated up to $1 million in a single year.

"With this change, 99 per cent of developers globally that sell digital good and services with Play will see a 50 per cent reduction in fees," Google said earlier this year.

Apple is also offering the same reduction in fee for app developers with under $1 million in annual sales.

Last month, the company agreed to change its long-held App Store policy, which for years has prevented developers from going outside the App Store for payment. As part of a proposed settlement to a class action lawsuit, the iPhone maker said that developers would be able to communicate with customers about payment options outside its official store.

Apple stated that it would allow developers to use messaging like email to share alternative methods of payments outside of their iOS app, provided users consent to receive them and have the right to opt out.

Last month, Microsoft also lowered the percentage of sales it keeps from game purchases on its Windows app store, from 30 per cent to 12 per cent.

AWS, the top cloud services provider, reportedly charges a listing fee of about 5 per cent. Microsoft said in July that it had lowered its rates from 20 per cent to 3 per cent.

Despite strong revenue growth in the past one year, GCP is still an unprofitable division for its parent company Alphabet.

In the second quarter, Alphabet reported a $591 million operating loss from its Cloud segment on $4.6 billion in revenue. The company relies on advertising for about 82 per cent of revenue and virtually all of its profit.

In April, Microsoft announced its earnings results for fiscal Q3, posting $17.7 billion in commercial cloud revenue, up 33 per cent from a year earlier. The Intelligent Cloud business, which includes Azure and server products, contributed $15.1 billion in the quarter, while Productivity and Business Processes posted $13.6 billion.