Amazon Challenges Apple & Google With In-App Purchase Scheme

In a bid to challenge Apple and Google’s app stores, Amazon is piloting a new service which allows users to make purchases through mobile applications, Bloomberg reports.

The service, which Amazon has been piloting for around a month, will allow users to make both subscriptions and in-app purchases. The trials are still in the very early stages, but one of the companies taking part in the pilot, Skimble, is optimistic about the service, saying that it will provide both a premium and individual package when the new app service launches.

It’s also expected that Amazon will charge a 30 per cent commission to clients for its in-app purchase service, the same rate as it charges developers for app sales.

The initiative could be a way for the company to improve sales and generate more revenue for its Kindle Fire tablet, as well as adding to the growing number of apps available for the device. Ultimately, it puts Amazon in direct competition with Apple and Google, the two biggest players in the mobile app market. The Kindle Fire runs on a heavily modified version of the Android OS and their app store already sells apps for the same OS.

The freemium model, which normally means apps are free to download but you pay for extra content, is a business model that’s growing in popularity with app developers, and Amazon’s inclusion of this option will make its products more appealing for developers.

The news comes after it was recently revealed that the Amazon App Store makes $0.89 for every $1 Apple makes in its iTunes app store. Google play was found to make only $0.23 for ever $1 Apple makes, but this is because Google makes the majority of its revenue from online advertising. According to IHS, In-app purchases will generate $5.6 billion in revenue in 2015, up from $970 million last year.