Apple slashes commission fees: On Wednesday, We witnessed a very surprised yet calculated move by Apple after a prolonged feud with developers.
- Apple on Wednesday announced they will be reducing the commission they take on App Store in-app purchases, from 30% to 15%, for small developers.
- This exemption in the commission will apply to developers that made less than $1 million in revenue over the past year.
- Apple, for a long time, has been engaged in a bitter quarrel with major developers like Spotify and Epic Games over its App Store commission policies. These policies have attracted antitrust scrutiny.
“We’re launching this program(the slashing of commission from 30% to 15%) to help small business owners write the next chapter with creativity and prosperity on the App Store, have a better chance competing with big firms, and to build quality apps which our customers love,” Apple CEO Tim Cook said in a press statement.
The cut is scheduled to take effect from January 1.
The commission has sparked a bitter fight between Apple and its developers over its policies on in-app purchases, which have resulted in antitrust scrutiny against Apple.
The rule forces the developers to use Apple’s payment system for in-app purchases, such as a Spotify Premium subscription. Apple then charges a 30% cut of every transaction.
Apple slashes commission fees They accuse Apple of abusing its strict control over which apps are allowed to function on iOS devices, arguing that it is anticompetitive if Apple then decides to launch its own competing products, such as its music-streaming service, Apple Music.
In September, all the developers frustrated by such policies of Apple formed a group called the Coalition for App Fairness to try to force Apple to get rid of the charge i.e, the commission.
Apple’s announcement is unlikely to affect larger developers, which don’t qualify for the price reduction.
The announcement, however, also doesn’t represent a huge financial hit for Apple.
As per analytics provided to The New York Times, while the change will affect 98% of companies that are on the apple store and pay a commission to Apple, their revenue combined totaled only about 5% of the total App Store revenue.
This step has been a necessary one as the small developer’s situation has gotten worse in the last few months because of the covid-19 pandemic.
There is a mixed reaction about the slashing of the commission in the developers’ community, but overall this seems to be a good step towards providing a more competitive industry where a small developer can stand a chance against big companies.