Oct 21, 2021
Bumble, Duolingo lead rally in shares of app developers after Google slashes subscription fees
This news has been received from: CNBC
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In this photo illustration the Duolingo logo seen displayed on a smartphone.Rafael Henrique | LightRocket | Getty Images
Shares of app developers like Bumble, Duolingo and Roblox rose on Thursday after Google said it would reduce the company's cut from subscriptions on its Android app store.
The change by Google would cut the commission on recurring subscriptions through the Google Play store from 30% to 15%, a move that could significantly reduce costs for any company that makes a lot of money through in-app purchases.
Google also said it would introduce a new program for apps that have large content costs, like streaming music or TV shows, which could lower Google's take even farther to 10%.
Google and Apple have both been slashing fees amid pressure from lawmakers and regulators over the power that the dominant app stores hold within their developer ecosystems. Google went even further than Apple, which has cut its take from 30% to 15% in many cases, including for apps making less than $1 million per year, news apps, and other services.
"This is great news!" tweeted Duolingo CEO Luis Von Ahn, after Google's announcement. "This reduction in subscription fees will help Duolingo accelerate our mission of providing universally available. education."
Duolingo, whose app helps customers learn foreign languages, rose 11% as of late afternoon Thursday. Dating app Bumble gained more than 8%.
Gaming stocks also rallied as games make up the majority of Google Play store revenue. Roblox rose about 6% and mobile game developer Zygna initially spiked on the news before settling down to a gain of about 1%. AppLovin, which owns several game studios, rose over 2%.
Streaming services with app-based businesses rose as well on optimism that platform costs may be permanently reduced. Netflix rose about 4%. Spotify was up less than 2%.
Google collected $11.6 billion in in-app purchases around the world in 2020 on $38.8 billion in spending on the Google Play store, according to an estimate provided by analytics firm Sensor Tower.
Google's move raised the possibility that Apple could decide to match its rival as the two app stores often have similar policies and take rates. Apple's store is generally considered more lucrative for developers than Google Play and most companies distribute software through both. Of the two, Apple has faced more intense pressure from regulators over app store fees.
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News Source: CNBC
How major US stock indexes fared Monday
Stocks closed solidly higher on Wall Street Monday, aided by a broad rally that included travel-related companies that stand to benefit from more reopening of the economy.
The S&P 500 rose and made up nearly all the ground it lost last week. Technology companies and banks accounted for a big slice of the gains. The Dow Jones Industrial Average and the Nasdaq rose.
The S&P 500 rose 53.24 points, or 1.2%, to 4,591.67.
The Dow Jones Industrial Average rose 646.95 points, or 1.9%, to 35,227.03.
The Nasdaq rose 139.68 points, or 0.9%, to 15,225.15.
The Russell 2000 index of smaller companies rose 44.17 points, or 2%, to 2,203.48.
For the year:
The S&P 500 is up 835.60 points, or 22.2%.
The Dow is up 4,620.55 points, or 15.1%.
The Nasdaq is up 2,336.87 points, or 18.1%.
The Russell 2000 is up 228.62 points, or 11.6%.
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