Nov 19, 2020 - Technology

Apple's App Store commissions tweaks leave critics wanting

Illustration of the Apple logo made out of a repeating hundred dollar bill pattern.
Illustration: Aïda Amer/Axios

While many developers will benefit from Apple's move Wednesday to cut commissions for companies earning less than $1 million per year in App Store revenue, the company's critics derided the move as a cynical attempt to distract from what they see as Apple's broader anticompetitive business practices.

Why it matters: Apple's move appears designed to appease concerns from critics and regulators, but it's unclear how far it will go to assuage them. Thus far, not very.

Between the lines: The vast majority of developers make less than $1 million per year and will benefit from the change. But most of Apple's revenue comes from a small number of large developers.

  • That means most consumers will still be absorbing Apple's higher 30% rate for the vast majority of paid downloads and in-app purchases.
  • Loup Ventures' Gene Munster estimates that the move will cut Apple's commission revenue for fiscal 2021 from $15.8 billion to $14.2 billion, about 0.5% of the company's total estimated revenue.

The big picture: Most of those who spoke out Wednesday have previously criticized Apple over its App Store practices, including Spotify, Match Group, Basecamp — and of course Fortnite creator Epic Games, which is suing Apple (and Google) over mobile app store commissions.

  • Speaking at the New York Times' DealBook online summit, Epic CEO Tim Sweeney called his company's effort an act of civil disobedience: "When a contract goes outside the bounds of the law, as Apple is doing, and has such a negative and pervasive impact on society, it's everybody's duty to fight."
  • As for Apple's rate cut, Sweeney said it was "a fantastic change" for many small developers. "Who it's not awesome for is consumers," he said.

What they're saying:

  • Basecamp CTO David Heinemeier Hansson: "Trying to split the App Store opposition with conditional charity concessions, they — a $2T conglomerate — get to paint any developer making more than $1m as greedy, always wanting more. As clever as it's sick."
  • Coalition for App Fairness: "Apple's announcement doesn't even begin to rectify the abuse and monopoly behavior developers have to endure in the App Store. We need fundamental change."

The other side: "The reduced commission for small businesses will allow them to put additional resources towards scaling up and innovating new products and services," said ACT — The App Association president Morgan Reed.

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