Apple cuts App Store commission rate to 15% for smaller developers
Apple and Google collectively control the mobile app ecosystem and that’s no understatement. Apple’s iOS and iPadOS and Google’s Android power more than 99% of the smartphones and tablets in the world. Both the tech giants also dictate how app developers get paid for purchases made by users on the App Store and the Play Store. They charge a hefty 30% of developers’ revenues as commissions for facilitating the obligatory in-app purchases. This policy has blighted many indie developers and caused bigger ones — such as Spotify and Epic Games — to launch full-blown insurgencies against these tech giants. However, Apple is now taking a major step backward and halving its commission rate for small developers.
Apple today announced its App Store Small Business Program to “accelerate innovation and help small businesses and independent developers.” As per the new policy, they will now charge only 15% as a commission instead of the erstwhile 30% for developers making less than $1 million in yearly revenue.
This announcement comes as a major relief from Apple to app developers marketing and selling their apps on the App Store. The step shows that Apple is addressing major pain points to incentivize developers, just like they promised during the online WWDC event earlier this year. According to NYTimes quoting Sensor Tower, this move will affect about 98% of the companies that pay Apple a commission, but these developers account for less than 5% of the App Store revenue last year. This way, Apple keeps its pie while still earning goodwill from a large population.
Apple is far from lowering its guard against larger developers, especially disgruntled ones such as Epic Games, which launched a campaign against the allegedly Orwellian ecosystem.
Earlier this year, Epic Games bypassed Apple and gave users the option to make direct payments in exchange for a 20% discount. Apple retaliated by removing Fornite from the App Store for violating their payments policy, and therefore, limited the availability of the first-person shooter on iOS — owing to the lack of a reliable third-party app store. Epic sued Apple in return but Fornite updates on iOS stay suspended for the last three months. Epic, together with Spotify and others, also joined a “Coalition for App Fairness” to challenge the monopoly by Google and Apple.
While the battle between Apple and the Fornite developer is yet to yield an epic outcome, the latest step will definitely calm down the former’s critics. We also hope that Google follows Apple’s lead in lowering down Play Store commissions, which — ironically — it has been bolstering.