Apple to lower App Store fees for smaller developers

Apple Inc said on Wednesday it plans to start a program to lower its App Store commissions for software developers who make $1 million or less in proceeds each year from the store.

Apple takes a 30% cut of most purchases made on the App Store, although the commission drops to 15% for subscriptions that remain active for more than a year.

The iPhone maker said developers will automatically get the lower 15% rate if they generate $1 million or less in proceeds - defined as the portion of store purchases that the developer keeps - in a calendar year.

Based on the publishers they track, analytics firm Sensor Tower said 4.9% of the App Store's 2019 revenue came from those who generated less than $1 million in gross consumer spending, while 97.5% of the iOS publishers generated less than $1 million per year in gross consumer spending.

The App Store generated $59.3 billion from gross consumer spending in the first 10 months of 2020 and Apple would have made $17.8 billion if it took a 30% cut, according to Sensor Tower estimates.

Apple's App Store fees and rules have come under fire from large firms such as Microsoft Corp, Spotify Technology SA, Match Group Inc and Epic Games as well as startups and smaller companies that allege the fees deprive consumers of choices and push up the price of apps.

"This would be something to celebrate were it not a calculated move by Apple to divide app creators and preserve their monopoly on stores and payments, again breaking the promise of treating all developers equally," Epic Games Chief Executive Officer Tim Sweeney said.

"Apple is hoping to remove enough critics that they can get away with their blockade on competition and 30% tax on most in-app purchases."

In reply to criticisms, the world's most valuable company has previously said its rules apply evenly to developers and that the App Store provides an easy way to reach its huge base of users without having to set up payment systems in the 175 countries where it operates.

Apple said the new program will start on Jan. 1 and it will give more details on which developers qualify next month.