Nov 18, 2020 - Technology

Apple to lower commissions for small businesses on App Store

A screenshot of the App Store portion of Apple's Website

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Apple announced a new program Wednesday under which it will take a smaller 15% cut from App Store sales for businesses earning less than $1 million selling their apps, rather than the standard 30% cut.

Why it matters: Apple is under fire from some critics over its rigid App Store policies that require developers to use Apple payment systems for both app sales and in-app payments in exchange for a cut of sales.

How it works:

  • Under the new App Store Small Business Program, launching Jan. 1, developers who made up to $1 million in 2020 for all of their apps, as well as developers new to the App Store, qualify for the reduced rate.
  • Once a participating developer surpasses the $1 million in App Store revenue, the standard commission rate will apply for the remainder of the year. 
  • If a developer’s business falls below the $1 million threshold in a future calendar year, they can requalify for the 15% commission for the following year.

Between the lines: The move comes amid growing criticism from some developer corners as well as heightened interest from antitrust regulators.

  • Fortnite creator Epic is suing Apple (and Google) over their store policies, which have also been criticized by Spotify, Match Group and others.

Our thought bubble: The move should help generate some positive press for Apple and please smaller app makers. But it doesn't really address the concern of developers, such as Epic Games, who want a way to reach iPhone owners without taking part in Apple's payment system.

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