Apple, facing growing antitrust scrutiny over what it charges other companies for access to its App Store, said on Wednesday that it would cut in half the fee it took from the smallest app developers.
Developers that brought in $1 million or less from their apps in the previous year will pay a 15 percent commission on those app sales starting next year, down from 30 percent, the company said.
Good news, but it raises a whole bunch of questions – for instance, are developers going to remove their application from the store as they approach the 1 million dollar mark, since otherwise they’d have to make 1.25 million dollar the next year as to not lose out? Apple developer Twitter is confused as all heck about this.
Then there’s this:
The change will affect roughly 98 percent of the companies that pay Apple a commission, according to estimates from Sensor Tower, an app analytics firm. But those developers accounted for less than 5 percent of App Store revenues last year, Sensor Tower said. Apple said the new rate would affect the “vast majority” of its developers, but declined to offer specific numbers.
In other words, this is a minor change for Apple, and will most likely do little to stave off antitrust concerns.
Thom Holwerda,
This may help struggling app developers. That’s like getting a 21% raise. IMHO the 30% fees were always way too high to justify what developers were getting in return. The prices were kind of fixed by the tech oligopolies that control the markets. Elective or not, this more competitive fee structure from apple might prompt google to announce a change in their fee structure too? One can hope.
Yeah, the vast majority of money goes to the players at the very top of the market. To the extent that one might view these fees as taxes, making it a progressive tax might be more beneficial to small developers.
https://www.britannica.com/topic/progressive-tax
While this cut probably don’t mean much for epic’s antitrust case against apple, apple’s intention is probably to turn the tables on epic’s very successful PR campaign to label apple as a greedy corporation responsible for bumping up everyone’s costs.
http://www.osnews.com/story/132202/epic-offers-new-direct-payment-in-fortnite-on-ios-and-android-to-get-around-app-store-fees/
http://www.osnews.com/story/132218/apple-threatens-to-terminate-epics-access-to-ios-and-mac-developer-tools/
Although to me, it isn’t so much about costs as much as it is about personal freedoms. Device owners should not require permission from 3rd party corporations to use the apps & stores that they want to use.
@Alfman
>”Device owners should not require permission from 3rd party corporations to use the apps & stores that they want to use.”
You have that wild-west scenario in Android. If that’s what you want simply go there. If your advocacy were to be fully-realized, it would completely deny access to everyone who want/need a secure, walled garden for their mobile platform.
haus,
Obviously that’s not true. People can get security benefits of a gated community without taking away their right to leave for as long as they own the house.
It’s the philosophy of freedom versus coercion: you believe in taking away an owner’s right to buy software from wherever they like in a free market whereas I believe everybody’s choices of where to buy software is nobody’s business but their own.
I find totalitarianism to be inherently distasteful and I find it incomprehensible when people cheer for their freedoms to be taken away. There are plenty of things that apple does well, but this argument that iphone owners have to be blocked from using other app stores doesn’t make sense. I’ve pressed you on this before, but I would like to hear you say that you are not affiliated with apple. It should be a fair question.
AFAIK the Apple tax was 30% for the first year only and after it went down to 15%. As this is mandatory tax, for being able to develop for Apple platform, i welcome the reduction of this tax for the first year. As for people saying then just don’t develop for Apple. Well, if you are a developer, you more or less must develop for Apple. It’s not like you have a choice. Due to the position Apple has on the market such taxes and other rates hence should be set reasonably and to be considered acceptable. In addition people must be allowed to install applications from outside of Apple store.
This doesn’t seem wise. When you deliberately punish successful business with higher taxes, to which an Apple fee can be compared, you generally end up with people doing end-runs around the terms to avoid paying them. This typically spirals into an on-going cat and mouse game, resulting in expenses increasing more than the initial implementation would suggest. When we add in the fact that other large app developers, e.g. Amazon, already have a 15% fee agreement with Apple, you’re looking at a system that punishes those in the middle. Those small enough skate by with a smaller fee, those big enough negotiate a smaller fee, while those who are neither get screwed. Hmm, sounds a lot like the tax codes in most countries, come to think of it. The simplest way out of this would just be for Apple to cut all App Store fees down to 15% and be done with it. They could most likely go even lower without adversely affecting their bottom line.
darknexus,
I think you make a good case that the fees should be the same for everybody…boardroom deal making inevitably leaves some developers paying fees just because they don’t have the muscle to negotiate something more fair.
But apple is making many billions of dollars a year by taxing 3rd party developers, cutting fees across the board would significantly dig into their yearly profits. If you are apple, the main question to ask yourself is whether it makes more sense to make concessions that are still in your favor now, or risk being prosecuted in an antitrust case that can handcuff your business models for decades to come.
I don’t really know what will come of the EU trials. These lawsuits rarely go into the billions, in which case apple could easily afford to brush it off. However if the lawsuit were to force apple to give iphone owners the right to buy software from other stores, it could easily cost apple tens of billions a year – far more than punitive damages or settlement.