Apple cuts App Store commission to 15% for developers paid less than $1M per year

Posted:
in General Discussion edited November 2020
Apple is launching a new program that will cut App Store commissions to 15% per year, for developers and businesses paid less than $1 million a year by Apple.


Apple's App Store
Apple's App Store



The App Store Small Business Program, which will launch on Jan. 1, 2021, will only require developers to come in below $1 million per year paid out from Apple to qualify for a lower 15% rate. The lower rate also applies to the first year of subscription sales, making that cut 15% versus the existing 30% for first-year subscribers, if the earnings criteria is met.

If a developer passes $1 million in a year, the standard 30% cut will kick in for the remainder of the year.

"We're launching this program to help small business owners write the next chapter of creativity and prosperity on the App Store, and to build the kind of quality apps our customers love," said Apple CEO Tim Cook.

Apple also says that the new program is coming at a crucial time, and will allow small businesses and independent developers to "innovate and thrive during a period of unprecedented global economic challenge" during the coronavirus pandemic.

"This is a big opportunity for the indie gaming spirit to become truly mobile," said indie developer Phillip Stollenmayer, known for Apple Design Award winner Song of Bloom.

Samantha John, co-founder of iPad coding app Hopscotch, says that the new program will allow her team to "take some risk" in offering the app for free.

"Specifically around our subscription, ... I think it is a good strategy in terms of making money, but it also limits the audience of the app. And we've been wanting to walk back that paywall and let people do more for free in the hopes that farther down the line we will have even more loyal subscribers to Hopscotch," she added.

The iPhone maker said that more details about the program and its eligibility requirements would be released in December.

Apple's 30% cut of in-app purchases has come under scrutiny in recent years, with many developers rallying against the commission and the company's alleged stranglehold on the App Store.

Facebook and Microsoft have criticized the 30% fee, and in September, a coalition of developers launched a group to battle both App Store policies and commissions.

Apple is also still embroiled in a legal battle with "Fortnite" developer Epic Games after it attempted to skirt the commission by implementing a direct payment method in violation of App Store guidelines.

That cut of in-app purchases has also come under fire from antitrust regulators and government officials. Ahead of Cook testifying before the U.S. House Antitrust Subcommittee, the chairman of the committee likened the fee to "highway robbery." Apple is also the focus of ongoing antitrust investigations in Europe and other countries.

Previously, Apple has highlighted an independent study conducted by the Analysis Group that found that the 30% fee is "similar magnitude to the commission rates charged by many other app stores and digital content marketplaces." The Google Play Store also charges a 30% fee on in-app purchases.

In October, Apple also rebutted a U.S. House Judiciary report that claimed it enjoyed monopoly powers on the App Store. In its response, the company maintained that developers were still the "primary beneficiaries" of the app marketplace.

In the most recent Form 10-K that Apple submitted to the Securities and Exchange Commission, the company admitted that any changes to its App Store commission would hurt its bottom line.

The new small business program announced on Wednesday comes a few months after Apple made it easier to developers to challenge specific App Store policies.
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Comments

  • Reply 1 of 97
    I'm sure the Apple-haters will come out of the woodwork again, today. Bear in mind that even 30% is a lot less than the 100% markup that was always the case when selling software in boxes in retail outlets. 
    williamlondoncornchipjahbladeJWSCgregoriusmargonautBeatswatto_cobrajony0
  • Reply 2 of 97
    crowleycrowley Posts: 9,119member
    This is a good move
    elijahg
  • Reply 3 of 97
    This is a great move for Apple. It will help a lot of small app developer.

    I wonder if other platforms owner will follow. It is easy to criticize Apple. But when it hurts their bottomline. They will give a million excuses not to do it.  

    jahbladewatto_cobra
  • Reply 4 of 97
    avon b7avon b7 Posts: 5,959member
    This move doesn't tackle the root issue that is being investigated on multiple fronts. That there is only one App Store on Apple devices. 

    Apple can legitimately charge whatever it wants but that isn't, and has never been, the root issue.

    I think Apple feels good news won't result from the different investigations and this reduction is a move to leave them in slightly better light when final rulings are delivered. 
    edited November 2020 cornchipelijahgargonaut
  • Reply 5 of 97
    avon b7 said:
    This move doesn't tackle the root issue that is being investigated on multiple fronts. That there is only one App Store on Apple devices. 

    Apple can legitimately charge whatever it wants but that isn't, and has never been, the root issue.

    I think Apple feels good news won't result from the different investigations and this reduction is a move to leave them in slightly better light when final rulings are delivered. 
    I think I know what you mean by "root issue," although you didn't define it. If Apple's overall App Store requirements are rejected by the court, as I infer you want to see, then I sure hope Apple declares the App Store to be a "money losing venture" and completely removes its "third party App Store" from iOS. I think that would be great for Apple's profits because it means that Apple has exclusive rights to sell software for iOS. So for that reason, I'd be somewhat happy if Apple lost in court.
    edited November 2020 williamlondon
  • Reply 6 of 97
    gatorguygatorguy Posts: 23,302member
    avon b7 said:
    This move doesn't tackle the root issue that is being investigated on multiple fronts. That there is only one App Store on Apple devices. 

    Apple can legitimately charge whatever it wants but that isn't, and has never been, the root issue.

    I think Apple feels good news won't result from the different investigations and this reduction is a move to leave them in slightly better light when final rulings are delivered. 
    I think know what you mean by "root issue," although you didn't define it. If Apple's overall App Store requirements are rejected by the court, as I infer you want to see, then I sure hope Apple declares the App Store to be a "money losing venture" and completely removes its "third party App Store" from iOS. I think that would be great for Apple's profits because it means that Apple has exclusive rights to sell software for iOS. 
    Great for Apple? Hardly if what they claim about services revenue is true. Great for consumers if Apple is the only source of add-on functions and features? Not at all.

    Why would you be cheering for the massive corporation to become even more massive? I doubt it would be an incentive for them to be more consumer responsive.
    edited November 2020 elijahgargonaut
  • Reply 7 of 97
    You or Epic are free to go and create a web-app-store using web technologies, same as the game streaming services are gonna be using to avoid Apples app store.
    retrogustomattinozhammeroftruthStrangeDaysjibargonautwatto_cobraDetnatorjony0
  • Reply 8 of 97
    avon b7avon b7 Posts: 5,959member
    avon b7 said:
    This move doesn't tackle the root issue that is being investigated on multiple fronts. That there is only one App Store on Apple devices. 

    Apple can legitimately charge whatever it wants but that isn't, and has never been, the root issue.

    I think Apple feels good news won't result from the different investigations and this reduction is a move to leave them in slightly better light when final rulings are delivered. 
    I think know what you mean by "root issue," although you didn't define it. If Apple's overall App Store requirements are rejected by the court, as I infer you want to see, then I sure hope Apple declares the App Store to be a "money losing venture" and completely removes its "third party App Store" from iOS. I think that would be great for Apple's profits because it means that Apple has exclusive rights to sell software for iOS. So for that reason, I'd be somewhat happy if Apple lost in court.
    The root issue is if Apple limits competition and also abuses its position. 

    That is to be determined. As things stand I feel the EU could rule against Apple but it's still up in the air. One possible outcome could be for Apple to be required to make customers aware (before purchase and in simple terms) that purchasing iOS devices with the App Store, requires tacit acceptance that Apple will have sole control of App Store management and fees.

    Not dissimilar to the cookie situation in the EU. 
    Detnator
  • Reply 9 of 97
    avon b7 said:
    This move doesn't tackle the root issue that is being investigated on multiple fronts. That there is only one App Store on Apple devices. 

    Apple can legitimately charge whatever it wants but that isn't, and has never been, the root issue.

    I think Apple feels good news won't result from the different investigations and this reduction is a move to leave them in slightly better light when final rulings are delivered. 
    To be honest, this is an appealing point of the Apple ecosystem. I don’t want to have to install multiple store apps. I don’t want to have to give my credit card to other app stores, some of probably questionable quality. I don’t want to have to figure out which App Store to to go to check for updates. I don’t want to have to search through multiple app stores (or worse each app individually) to figure out what subscriptions I have. The single store brings a lot of advantages that I don’t want to give up and probably more I’m forgetting to list. I think people get too concerned about only cost and don’t see the chaos multiple stores could bring. The idea that costs would go down I don’t think is a sure thing either. it just means money going into different pockets, not less money. Apple spend a lot of money developing the chips and other technology in the phones. They spend a ton of money on the compiler and developer tools. They spend money developing the APIs the developers use. They aren’t going to just open this to other stores completely bypassing Apple. if it’s mandated, the stores are going to have to pay Apple something. 
    williamlondontmayjahbladeh4y3sretrogustohammeroftruthStrangeDaysrandominternetpersonjibargonaut
  • Reply 10 of 97
    crowley said:
    This is a good move
    Maybe. Or maybe this move is too little too late for Apple. Time will tell. But either way, it sure seems like Apple bowed down to Facebook this time. 
    williamlondon
  • Reply 11 of 97
    Let me put it plain and simple for all. It’s Apple Shareholders’ Store and Platform.

    Shareholder expect the management to generate profits. Since Apple owns the store, they do not have to let anyone else in their store which exist to generate profit from their platform. Just because they are better at generating “ginormous” amounts of cash,  that by itself does not give anyone the “RIGHT” to be in their store. 

    I have not seen a single developer or anyone else spend a single penny when it comes to paying for Apple’s various yearly development, legal, contractors, patent, and employees cost. These costs are not cheap and shareholders expect the management to recover these costs. 

    Apple unlike most companies give a lot of other people and companies a free ride in respect to above listed cost. With that said helping  the little guy/gal out is a good thing to do. But letting a million plus dollar corporations ride for free “ain’t” a thing I am prepared to forgive as an Apple shareholder.

     The current 15 to 30 per cent is a bargain to what should be a higher  rate for using Apple “privately owned” platform and gaining access to the platform customers. The last time I checked I do not think Macy’s has ever given Nordstrom equal access to its stores, customers or products. Nor has either one of them let someone display or sell a product in their stores for just 15 to 30 percent or for FREE! 
    cornchipjahbladeh4y3sjibargonautBeatswatto_cobraDetnator
  • Reply 12 of 97
    glennh said:
    Let me put it plain and simple for all. It’s Apple Shareholders’ Store and Platform.

    Shareholder expect the management to generate profits. Since Apple owns the store, they do not have to let anyone else in their store which exist to generate profit from their platform. Just because they are better at generating “ginormous” amounts of cash,  that by itself does not give anyone the “RIGHT” to be in their store. 

    I have not seen a single developer or anyone else spend a single penny when it comes to paying for Apple’s various yearly development, legal, contractors, patent, and employees cost. These costs are not cheap and shareholders expect the management to recover these costs. 

    Apple unlike most companies give a lot of other people and companies a free ride in respect to above listed cost. With that said helping  the little guy/gal out is a good thing to do. But letting a million plus dollar corporations ride for free “ain’t” a thing I am prepared to forgive as an Apple shareholder.

     The current 15 to 30 per cent is a bargain to what should be a higher  rate for using Apple “privately owned” platform and gaining access to the platform customers. The last time I checked I do not think Macy’s has ever given Nordstrom equal access to its stores, customers or products. Nor has either one of them let someone display or sell a product in their stores for just 15 to 30 percent or for FREE! 
    Not seen a single developer spend a single penny on Apple's cost? What do you think the 30% Apple takes is for? Are you suggesting that in addition to the 30% (now 15% in some cases) that developers should make additional contributions? Perhaps they should hold a YouTube telethon to raise money for the charity that is the Apple App Store?

    If you don't think there's profit built into the 15% - 30% you're crazy and you really have no idea how much money some of these apps really make...Candy Crush alone could support all of Apple's costs and more than likely still make them a profit. 
    elijahggatorguyargonaut
  • Reply 13 of 97
    avon b7 said:
    avon b7 said:
    This move doesn't tackle the root issue that is being investigated on multiple fronts. That there is only one App Store on Apple devices. 

    Apple can legitimately charge whatever it wants but that isn't, and has never been, the root issue.

    I think Apple feels good news won't result from the different investigations and this reduction is a move to leave them in slightly better light when final rulings are delivered. 
    I think know what you mean by "root issue," although you didn't define it. If Apple's overall App Store requirements are rejected by the court, as I infer you want to see, then I sure hope Apple declares the App Store to be a "money losing venture" and completely removes its "third party App Store" from iOS. I think that would be great for Apple's profits because it means that Apple has exclusive rights to sell software for iOS. So for that reason, I'd be somewhat happy if Apple lost in court.
    The root issue is if Apple limits competition and also abuses its position. 
    Apple has no obligation to have a third party app store at all. Right? Do you agree? And I can't figure out how OPENING its platform to third party apps is somehow LIMITING competition. How do you argue that? I just don't understand how you could possibly think that. Enlighten me.
    cornchipretrogustoBeatswatto_cobraDetnator
  • Reply 14 of 97

    gatorguy said:
    avon b7 said:
    This move doesn't tackle the root issue that is being investigated on multiple fronts. That there is only one App Store on Apple devices. 

    Apple can legitimately charge whatever it wants but that isn't, and has never been, the root issue.

    I think Apple feels good news won't result from the different investigations and this reduction is a move to leave them in slightly better light when final rulings are delivered. 
    I think know what you mean by "root issue," although you didn't define it. If Apple's overall App Store requirements are rejected by the court, as I infer you want to see, then I sure hope Apple declares the App Store to be a "money losing venture" and completely removes its "third party App Store" from iOS. I think that would be great for Apple's profits because it means that Apple has exclusive rights to sell software for iOS. 
    Great for Apple? Hardly if what they claim about services revenue is true. Great for consumers if Apple is the only source of add-on functions and features? Not at all.

    Why would you be cheering for the massive corporation to become even more massive? I doubt it would be an incentive for them to be more consumer responsive.
    I noticed you cut out the last sentence I wrote, which is partly your answer. Why did you edit out the key point? I said "I would be somewhat happy if Apple lost in court." That is an explicit admission that I wouldn't be entirely happy. And the reason for that is that I don't actually want our privileges for writing and purchasing software removed. I'm just pointing out to the idiots out there that removing these privileges is not in their interest. I'm trying to show the negative consequences of their line of thought.

    And in any case, what's evil about cheering for a big corporation to become bigger if I was doing that? Are corporations evil in your opinion? Why do you object to growing profits for Apple or any corporation? I know nothing about you, other than you have 22k posts. Are you opposed to capitalism?
    cornchipOctoMonkeywatto_cobraDetnator
  • Reply 15 of 97
    This is a good move - I hope it will not be compensated by higher prices for Apple Search Ads (that many developers use to get their apps found). It would be definitely good if Apple would specify their income from the App Store and Search Ads in the quarterly results!
    argonaut
  • Reply 16 of 97
    lkrupplkrupp Posts: 9,635member
    gatorguy said:
    avon b7 said:
    This move doesn't tackle the root issue that is being investigated on multiple fronts. That there is only one App Store on Apple devices. 

    Apple can legitimately charge whatever it wants but that isn't, and has never been, the root issue.

    I think Apple feels good news won't result from the different investigations and this reduction is a move to leave them in slightly better light when final rulings are delivered. 
    I think know what you mean by "root issue," although you didn't define it. If Apple's overall App Store requirements are rejected by the court, as I infer you want to see, then I sure hope Apple declares the App Store to be a "money losing venture" and completely removes its "third party App Store" from iOS. I think that would be great for Apple's profits because it means that Apple has exclusive rights to sell software for iOS. 
    Great for Apple? Hardly if what they claim about services revenue is true. Great for consumers if Apple is the only source of add-on functions and features? Not at all.

    Why would you be cheering for the massive corporation to become even more massive? I doubt it would be an incentive for them to be more consumer responsive.
    Well, you are cheering for Google every damned chance you get. Hypocrite?
    cornchipericthehalfbeeStrangeDaysMacProBeatswatto_cobra
  • Reply 17 of 97
    lkrupp said:
    gatorguy said:
    avon b7 said:
    This move doesn't tackle the root issue that is being investigated on multiple fronts. That there is only one App Store on Apple devices. 

    Apple can legitimately charge whatever it wants but that isn't, and has never been, the root issue.

    I think Apple feels good news won't result from the different investigations and this reduction is a move to leave them in slightly better light when final rulings are delivered. 
    I think know what you mean by "root issue," although you didn't define it. If Apple's overall App Store requirements are rejected by the court, as I infer you want to see, then I sure hope Apple declares the App Store to be a "money losing venture" and completely removes its "third party App Store" from iOS. I think that would be great for Apple's profits because it means that Apple has exclusive rights to sell software for iOS. 
    Great for Apple? Hardly if what they claim about services revenue is true. Great for consumers if Apple is the only source of add-on functions and features? Not at all.

    Why would you be cheering for the massive corporation to become even more massive? I doubt it would be an incentive for them to be more consumer responsive.
    Well, you are cheering for Google every damned chance you get. Hypocrite?
    I may have 1000 posts, but my memory isn't good enough to remember what posters said previously. I see your memory is not impaired.
  • Reply 18 of 97
    elijahgelijahg Posts: 2,506member
    Excellent news for developers and a sensible compromise. Good on Apple.

    I have said previously it would be very sensible for them to capitulate voluntarily before they are forced to do something that might be very damaging to their business. Losing 15% on sales under $1m is nothing compared to being forced to reduce the cut for all, or being forced to allow third party stores (though this may still happen imo). Hopefully this will reduce scrutiny of Apple and give them a bit more goodwill in the antitrust suits - it's good that they're being flexible, though it's a shame it's required regulatory involvement before Apple took action themselves. This also shows Apple is aware it may lose some of the antitrust suits, and as such has taken action to reduce one vector for attack.

    It's unfortunate that rather than looking upon this as a good thing for everyone, there is little doubt some of the fanatics here who think Apple can do no wrong and is in it for the good of society will come up with ad hominem attacks for those who dare to criticise Apple. In fact I see Lkrupp has already stepped up to the plate as expected.

    It will be interesting to see if Google follows suit, I very much doubt console makers will follow.
    edited November 2020 argonautwatto_cobra
  • Reply 19 of 97
    AppleZuluAppleZulu Posts: 1,273member
    avon b7 said:
    This move doesn't tackle the root issue that is being investigated on multiple fronts. That there is only one App Store on Apple devices. 

    Apple can legitimately charge whatever it wants but that isn't, and has never been, the root issue.

    I think Apple feels good news won't result from the different investigations and this reduction is a move to leave them in slightly better light when final rulings are delivered. 
    Once again, many Apple customers choose iOS devices in part specifically because of the tight control the App Store represents. We want the stability and security that is achieved by Apple’s review and quality control over all software that gets on an iOS device. 

    Competition and choice are still available. If you don’t want Apple’s arrangement, get an Android device. Forcing Apple to accommodate third-party app stores or a complete software free-for-all model would actually remove choice from the marketplace for users who prefer Apple’s current business model. 
    retrogustolondorStrangeDaysargonaut
  • Reply 20 of 97
    elijahgelijahg Posts: 2,506member

    avon b7 said:
    This move doesn't tackle the root issue that is being investigated on multiple fronts. That there is only one App Store on Apple devices. 

    Apple can legitimately charge whatever it wants but that isn't, and has never been, the root issue.

    I think Apple feels good news won't result from the different investigations and this reduction is a move to leave them in slightly better light when final rulings are delivered. 
    I think I know what you mean by "root issue," although you didn't define it. If Apple's overall App Store requirements are rejected by the court, as I infer you want to see, then I sure hope Apple declares the App Store to be a "money losing venture" and completely removes its "third party App Store" from iOS. I think that would be great for Apple's profits because it means that Apple has exclusive rights to sell software for iOS. So for that reason, I'd be somewhat happy if Apple lost in court.
    So Apple is going to cut off its nose to spite its face? They're going to cut out 90% of their services revenue overnight? Yeah good one.
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