Tuesday, December 1

Apple cuts App Store commission for small developers

Heavily criticized for its commission on the App Store, Apple decides to reduce the latter for small developers. What to promote innovation, but not to find the favors of Epic Games or Spotify.

Like most application and game stores (Steam, PlayStation Store, Microsoft Store, Google Play Store, etc.), Apple takes a commission of up to 30% on sales generated on the App Store. The apple brand is nevertheless strongly criticized on this subject, accused of practicing unfair competition because of its monopoly on the iPhone and iPad, a market yet important for any developer on mobile. Apple provides an answer to this.

On November 18, 2020, Apple announced in a press release a reduction in its commission for ” small ┬╗Developers. From January 1, 2021, new developers and those who earned less than $ 1 million (after commission) on the App Store in 2020 will enjoy a new program that removes only 15% commission on the sales generated.

So, starting next year, all developers generating less than $ 1 million in revenue from the App Store will benefit from this reduced commission. Any developer exceeding this ceiling amount will, however, see the commission on their sales drop back to 30% for the rest of the year. Conversely, falling back below this turnover will allow a company to benefit from this new rate the following year.

Note, however, that applications selling digital goods and services will still be levied at 30%.

Encouragement to take risks

By reducing its tax for small developers in this way, Apple wants to encourage small businesses to take risks, create new jobs and develop new ideas that “will enrich people’s lives┬╗On the App Store. This is also a way for Apple to regain the trust of developers creating the content necessary for the proper functioning of its products and to avoid an enlargement of the Coalition for the Equity of Applications.

As a reminder, Epic Games (Fortnite), Spotify, Match Group (Tinder) and others formed this Coalition for Apps Fairness in September to denounce this commission generating a competitive imbalance within the App Store. Spotify for example argues that it is difficult to compete with Apple Music which does not suffer from this tax.

All these companies are nevertheless large groups which obviously pocket much more than 1 million dollars. They are therefore not affected by this discount.

An unknown impact

If Apple specifies that a “vast majority” of developers will be eligible for this new rate, the Cupertino company has not specified what these small developers represent in its turnover. We imagine that like the whales on a gamefree-to-play(the 1% of gamers who make up 99% of a developer’s revenue), developers exceeding $ 1 million in revenue represent Apple’s main source of revenue.

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