Apple, amidst growing scrutiny over what it charges developers for access to its Apple store, has now decided to reduce the fee it used to take from smaller app developers.
On Wednesday (November 18th, 2020), Apple announced its new App Store Small Business Program starting from January 1st, 2021 under which the App Store commission rate will be reduced down to just 15% for any developer who earns less than $1 million in annual sales from all their apps. Earlier, Apple used to charge a 30% cut on paid apps and in-app purchases for apps on the App Store.
Apple believes this move would benefit the majority of developers. Though how many developers come under the eligibility criteria is yet to be revealed. Apple claimed in a statement that it has made these changes keeping in mind the effects of COVID-19 and how 2020 has been a difficult year for small developers and small companies.
“We’re going to be launching this program to help business owners write the next chapter of creativity and prosperity on Apple’s App Store, and for building the kind of quality apps that customers love,” claimed Tim Cook, Apple’s chief executive in a news release. The reduction in commission is aimed to help “developers in funding their small businesses, take risks and leaps of faith on new ideas, expand their horizon and continue making apps that enrich other people’s lives,” he added.
Apple commission reduction – Just a gimmick or is it actually beneficial?
This move seems to be an olive branch from Apple to developers as lawmakers are getting increasingly focused on business practices for the Apple Store, the only way to install apps and software on iPhones and iPads. The fee cut might not be enough to calm the waters between Apple and app developers (the big-name developers in particular) who have long protested the fee and it could just be a sop to federal and state regulators.
In fact, this move will have little impact on Apple’s bottom line. For the last decade, Apple’s App Store has helped in the company’s remarkable growth and Apple is reluctant to make any massive moves to tamper with it.
However, Apple seems to have found a way to mend the issues to an extent and earn goodwill from thousands of small developers and give itself the needed ammunition to defends its commission to journalists and regulators, WITHOUT costing much to the company.
The change in commission fee will affect almost 98% of the companies that pays Apple commissions, as per SensorTower’s (an app analytics firm) estimation. However, these developers only account for less than 5% of the App Store’s revenues. Apple claims that this new rate will affect the “vast majority” of the developers but declined to comment on a specific number.