Last week, Apple (NASDAQ: AAPL) unveiled a new program clearly designed to respond to ongoing antitrust criticism. Dubbed the Small Business App Store program, eligible developers who earn $ 1 million in annual revenue or less can earn a commission rate of just 15% – half the normal 30% discount that the Mac maker has. takes on digital sales.
Is the move too little, too late?
How the program works
Apple has faced backlash for its standard 30% cut, especially in the context of small independent developers not making as much money as the richest company in the world. As long as the developer generated $ 1 million or less in gross product in the previous calendar year, the developer is eligible for the reduced rate.
The program will go into effect on January 1 of next year, so a developer’s 2020 product will determine eligibility for next year. The Cupertino tech giant will use a developer’s income after deducting Apple’s cut to determine the developer’s income. Once a developer reaches $ 1 million in revenue, the normal 30% reduction will apply “for the rest of the year”.
The company says the new program will help “the vast majority” of developers on the App Store, without developing or providing specific metrics. Mobile analytics specialist Sensor Tower estimates the change will affect 98% of platform developers, according to The New York Times. However, these small developers make up less than 5% of App Store revenue, so Apple isn’t really giving up much in terms of absolute dollars.
Play more defense
The company spent much of 2020 defending itself against allegations of anti-competitive behavior. Apple backed a study earlier this year which showed its 30% commission is on par with other digital platforms such as game consoles.
Last month, the House Judiciary Committee released findings following a 16-month investigation. Lawmakers argued that the App Store was a monopoly on distributing iOS software, and Apple fought back aggressively on the results, preferring to define the relevant market as broadly as possible to minimize its market share.
Apple has made a series of small concessions in an attempt to alleviate concerns, such as recently allowing users to change the default apps for certain functions on iOS. The new program is another progressive concession aimed at the same goal, but it may not be enough to quell criticism. In fact, Apple’s most vocal critics – including Spotify and Fortnite maker Epic Games – are already opposing the change, claiming the $ 1 million threshold is arbitrary and creates a new tiered system that developers now have to navigate.
It’s great that Apple is giving a better deal to independent developers, but 95% of in-app purchases are for apps larger than Apple still taxing 30%, so that won’t relieve consumers who pay inflated prices for them. articles.
– Tim Sweeney (@TimSweeneyEpic) November 18, 2020
Epic CEO Tim Sweeney pointed out that Apple’s higher 30% discount will still apply to most in-app purchases, which theoretically leads to higher prices. This is important because lawmakers and regulators often focus on the ultimate impact on consumers when assessing claims of anti-competitive behavior.