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Microsoft CEO: Higher platform fees make sense for game consoles

Microsoft CEO: Higher platform fees make sense for game consoles

May 27, 2021 | By Chris Kerr

Microsoft CEO Satya Nadella has suggested that app stores should look to lower platform fees over time, but that the same thinking shouldn't be applied to console storefronts. 

Speaking to AXIOS, the Microsoft boss was asked why the company recently chose to cut the commission it takes on PC games sold through the Microsoft Store, but stopped short of offering the same 88 percent revenue share to console developers on the Xbox marketplace. 

According to recent reports, Microsoft had initially considered changing its rates on both storefronts, but it seems the company chose to stand by the 30 percent platform fees it charges console developers after deciding that hardware itself is part of the deal. 

"Wherever there is no subsidized hardware or device, or what have you, we want to make sure that we have the most competitive (prices)," explained Nadella, who noted that Microsoft takes a loss on every console it sells and makes up the difference through game sales. 

"On Xbox, the business model is just a very different business model. Everyone should try and do their best job of competing, and at the end of the day, end users and regulators are the ones who are going to keep us in check."

Platform fees have taken center stage recently after Epic Games sued Apple for removing Fortnite from the App Store after it added third-party payment options to the game. Epic breached platform rules by allowing players to bypass Apple's platform fees, but the company claimed it did so to end the unfair and anti-competitive "App Store Monopoly."

The two companies went to trial this month to settle the dispute, and the judge overseeing the case has warned the outcome could have "serious ramifications" for console makers.

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