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Apple will now distribute more money to developers earning less than $1 million, reduces its fee to 15 per cent

Apple has lowered the App Store commission down to half for select developers who will earn up to $1 million.

twitter-logoShubham Verma | November 18, 2020 | Updated 17:32 IST
Source: Reuters

Highlights

  • Apple has lowered the App Store commission down to 15 per cent.
  • It has been charging all developers a 30 per cent cut on all App Store purchases.
  • But only select developers will be able to benefit from this new initiative.

In what could be the biggest change to the App Store commission structure, Apple is cutting down its App Store fee for some developers to 15 per cent. The Cupertino-based company has launched the App Store Small Business Program that subsidises the App Store cut from 30 per cent down to 15 per cent for developers that have earned up to $1 million in proceeds during the previous calendar year. The developers will become eligible after meeting certain criteria to avail the lowered fee on both goods and in-app purchases made through the App Store.

The newly launched App Store Small Business Program will come into effect on January 1, 2021, which means the developers who have earned up to $1 million on the post-commission basis for this calendar year will be eligible next year to pay only half the commission fee. If their proceeds exceed the $1 million mark, after Apple has taken its 30 per cent cut, in the year 2020 will not be eligible for the reduced commission. These developers will have to pay the regular 30 per cent commission to Apple for the next year, as well.

But the developers whose earnings have surpassed $1 million this year after Apple's cut, see a decline in their revenue below $1 million in a future calendar year, they will become eligible for the cut in a commission that Apple has introduced under the App Store Small Business Program. If they continue to make less than $1 million subsequently, the commission will remain at 15 per cent.

This will also impact the subscription fees that customers pay. If the developer is paying less commission, it will charge less for the subscriptions that customers buy using the App Store. Normally, the price of some subscriptions is higher in the App Store than they are in the Google Play Store.

"Small businesses are the backbone of our global economy and the beating heart of innovation and opportunity in communities around the world. We're launching this programme 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," said Tim Cook, Apple CEO. "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."

The change in the App Store fee policy is a welcome move for developers that have been feeling the stress of paying 30 per cent cut to Apple, resulting in fewer revenues. Many companies recently decried Apple's App Store policy of 30 per cent cut, even calling it market abuse. One of these companies is Epic Games, which went as far as to sue Apple over its 30 per cent cut policy. Apple had booted Fortnite from the App Store after Epic Games refused to pay the 30 per cent commission to Apple. Even today, Fortnite is not available in the App Store, leaving iPhone users high and dry.

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