Apple announced that it will cut commissions it charges application developers as part of a new small business plan. Now, developers with annual revenues of less than $1 million will pay 15% of all transactions, half of the current 30%.
Apple said that the program will begin on January 1, 2021, will apply to app sales and in-app purchases, and will benefit “the vast majority” of developers on the platform. CEO Tim Cook said, “Small businesses are the backbone of our global economy” and the plan will help them “write a new chapter in creativity and prosperity on the App Store.”
The company will outline a more detailed set of rules in the future, but the basic point is that any company with less than $1 million in revenue will only pay a 15% commission. When their fees reach this threshold, a 30% commission will be charged for the rest of the year.
If their future income falls below $1 million, they will automatically resume using cheap tariffs. Larger companies with annual revenues of more than $1 million will maintain the 30% tax rate unchanged.
Apple said that the fees charged are used to provide developers and users with safe and reliable application development and sales platform. Not to mention that it enables these companies to enter the global market of approximately 1.5 billion Apple devices in use.
Since the establishment of the App Store, Apple’s commission rate has been a belief and has been adopted by many other application platforms.
But some developers are annoyed by Apple’s control of the app review process and believe that cutting costs by 30% is unfair. For example, Fortnite developer Epic Games deliberately violated the App Store’s regulations on in-app purchases to protest the current regime.
In response, Apple prohibited Epic from entering the App Store until it complied with the rules. This fight is currently being fought in many courts around the world, including Australia.
Epic’s skirmishes have been supported by other participants such as Microsoft, leading to growing dissatisfaction with the way the App Store operates.
People have been worried that antitrust complaints will be filed against Apple, which may force Apple to open the iOS application platform.
By lowering fees for small developers, Apple may be able to avoid criticizing its unfair behavior towards people who add too much value to its ecosystem.