> If this is true, why does Android not set their pricing at 5-10% or less, get more developers and outcompete apple?
You have discovered duopolies. It's not like Google isn't being sued for anti-competitive smartphone behavior right now.
Okay to be fair, that's a somewhat dismissive answer, it is slightly more complicated. Google uses Android more as an advertising platform than as a product on its own. Their goals are slightly orthogonal to Apple's and taking full market share or capturing high-paying users (especially users who are advertising-adverse and prefer to pay for apps) is not necessarily the most important thing in the world to Google.
As a point of reference, we're all fighting over the app store, but Google pays Apple more per-year to be the default search provider in Safari than Apple makes from the entire iOS app store in a year. All of the noise Apple has made... over less profit than they make with a single transaction from Google. This should tell you something about where Google's priorities lie and about whether or not the company really cares about seriously competing with iOS. Google is willing to expend enormous resources and to spend enormous amounts of money... about things they care about.
Google gets enough developers to compete with iOS in general, they don't really need to do more. And because of that they'll charge what they can. Sure, maybe Google could do something radical and transform the market, but why would they? It's not what Google is here for, they're here to get your data and then advertise to you and Android is just one mechanism out of many that Google has to do that.