Apple Reduces Its App Store Fees

Apple Will Charge Small Developers a 15% Commission for App Store Transactions

Apple (AAPL) announced that in 2021 it will cut its commission charges in half for small software developers selling products on its App Store. For companies generating under $1 million in revenue through the App Store, Apple will take a 15% fee rather than a 30% fee. For companies with sales on the App Store over $1 million, Apple will continue to take a 30% commission.

Apple’s App Store allows users to download apps onto over 1.5 billion devices around the world. In 2019 $519 billion worth of transactions happened on the platform and 85% of that money went to third parties. However, the company’s practices related to its App Store have faced significant criticism from private companies and governments. Many say that the recent change is not doing enough.

App Developers Respond

Apple’s App Store policies have caused the company to clash with a number of high-profile developers who use the app marketplace. Epic Games, the creator of the popular video game Fortnite, sued Apple earlier this year after Epic tried to get around paying the App Store commission and Apple banned Fortnite from the platform. Epic, Match Group (MTCH), which owns Tinder and Hinge, along with Spotify (SPOT), and other app developers founded a nonprofit called “The Coalition for App Fairness,” which is pushing for legal action to change Apple’s App Store policies.

The coalition stated in a tweet that Apple’s policy change is merely a “symbolic gesture,” and that the company needs to take more significant action to make the App Store a fair marketplace. It also said the $1 million cutoff is an arbitrary line to draw.

Scrutiny from Governments

Apple has faced antitrust scrutiny from the Justice Department, the Federal Trade Commission, and the European Union recently. The company has also faced accusations of anticompetitive behavior from Congress, along with other big tech companies.

Most of these regulators have not yet commented on Apple’s decision to change its App Store commission, but the company’s choice is likely to come up in future discussions between Apple and lawmakers around the world.

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