Apple Lowers Commission Charges For Small Developers

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Sorry Epic Games, not you. Developers who earn less than $1m per year will see Apple commission charges drop from 30% to 15%

Apple has announced a new developer program to aid small developers within its ecosystem, by charging them less commission.

Apple’s announcement revealed that the new App Store commission will fall from 30 percent down to 15 percent for small developers and businesses earning up to $1 million per year.

It comes after Apple has been engulfed in a wave of controversy over the commission it charges for use of its App Store. In September a ‘Coalition for App Fairness‘, that includes Spotify, Match Group and ‘Fortnite’ creator Epic Games, sought to pressure Apple over its Commission charges.

Lowering commission

Apple did not acknowledge any pressure but said that its “new developer program” is designed “to accelerate innovation and help small businesses and independent developers propel their businesses forward with the next generation of groundbreaking apps on the App Store.”

The new ‘App Store Small Business Program’ is designed to benefit “the vast majority of developers who sell digital goods and services on the store, providing them with a reduced commission on paid apps and in-app purchases.”

“Developers can qualify for the program and a reduced, 15 percent commission if they earned up to $1 million in proceeds during the previous calendar year,” said Apple.

This new lowered commission charge will launch on 1 January 2021, and “comes at an important time as small and independent developers continue working to innovate and thrive during a period of unprecedented global economic challenge.”

“Small businesses are the backbone of our global economy and the beating heart of innovation and opportunity in communities around the world,” said Tim Cook, Apple’s CEO. “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.”

“The App Store has been an engine of economic growth like none other, creating millions of new jobs and a pathway to entrepreneurship accessible to anyone with a great idea,” Cook added. “Our new program carries that progress forward – helping developers fund their small businesses, take risks on new ideas, expand their teams, and continue to make apps that enrich people’s lives.”

Apple said it will release “comprehensive details” about the new program in early December.

The firm said that the App Store’s standard commission rate of 30 percent remains in place for apps selling digital goods and services and making more than $1 million in proceeds, defined as a developer’s post-commission earnings.

However, it has emerged that Amazon for example is known to only pay a 15 percent commission charge to Apple, and its revenues exceed the $1m threshold by some margin.

Commission clashes

But Apple is facing a number of challenges over its commission levels, most notably from ‘Fortnite’ creator Epic Games, which has resulted in lawsuits and counter lawsuits after Fornite was removed from the App Store.

That decision was taken after Epic allowed players to purchase in-game currency directly from itself, bypassing Apple and Google’s payment systems and the 30 percent commission they charge.

Apple has previously robustly defended its commission charge of between 15-30 percent for apps that use its in-app payment system. It also imposes strict rules that apps must comply with to appear in its App Store, which is the only venue where iPhone and iPad can download apps for their devices.

Apple is also dealing with both antitrust investigations and lawsuits over its App Store policies, both in the US and Europe.

There is an EU antitrust investigation over Apple Pay and the Apple App Store, after Spotify filed an official complaint in 2019 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.

Meanwhile a trade body of news publishers also recently wrote an open letter to Tim Cook, demanding more favourable terms on the commission Apple collects from them for online payments.

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