Apple Report Defends 30 Percent App Store Fees

Apple has launched a defence of its app fees, after facing criticism, lawsuits and even anti-trust investigations on the matter.

The tech giant published a report it had commissioned from Analysis Group, which reportedly shows content makers typically give away a similar cut to dozens of other online markets, and an even bigger share if their goods are sold offline.

The report comes amid a number of headaches for the firm over the fees it charges. In June Apple was hit with a double whammy, when European Commission, after a year of debating, officially opened two formal antitrust investigations into Apple, over its App Store and Apple Pay.

App store fees

Apple had earlier confirmed that its App Store facilitated more than half a trillion dollars (£400bn) in trade worldwide in 2019.

However it said that it did not take a commission from more than 85 percent of those transactions.

Yet it is fair to say that Apple and other major tech companies remain under pressure from competition authorities in the US and Europe.

Apple chief executive Tim Cook is likely to participate in US congressional antitrust hearings next week, along with the chief executives of Amazon, Facebook and Google, where app fee charges are likely to be raised.

For Apple itself, many developers are unhappy with the 30 percent commission Apple exacts from digital purchases, amounting to $61bn in 2019.

Indeed, in June last year, Apple was hit with a lawsuit in the US from two app developers, who alleged that the App store gives the iPad maker a monopoly on the sale and distribution of iOS apps.

Spotify complaint

The EU meanwhile had said its probes of Apple was a “follow-up on separate complaints by Spotify and by an e-book/audiobook distributor on the impact of the App Store rules on competition in music streaming and e-books/audiobooks.”

It should be remembered that in March 2019, Spotify filed an official complaint and accused Apple of unfairly using the dominance of its App Store to give the Apple Music service a competitive advantage.

The Spotify complaint centred on Apple’s policy of charging digital content providers a 30 percent fee for using its payment system for subscriptions sold in the App Store.

Apple at the time strongly defended itself against Spotify’s complaints, and slammed the firm for using its App Store to dramatically grow its business, and then allegedly seeking to keep all the benefits of the App Store ecosystem (including hefty revenues), without making any contributions to that marketplace.

Apple defence

In the Analysis Group report (commissioned by Apple), it compared the App Store to 37 other digital and e-commerce marketplaces.

The found the firm’s standard demand of a 30 percent cut of sales was in line with what Microsoft, Google, Amazon and Samsung took.

But some platforms took much less commission or fees.

The report also reportedly suggested that developers and publishers got a smaller share from traditional “bricks-and-mortar” channels.

This is because shops and supermarkets typically take a 55 percent share of video games sales; a 50 percent share of newspaper sales; and a 60 percent share of magazine sales.

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