Apple to lower App Store fees for smaller software developers

Apple on Wednesday announced its plans to start a much-awaited program to lower its App Store commissions for software developers who make $1 million or less in proceeds each year from the store.
Apple HQApple takes a 30 percent cut of most purchases made on the App Store, though the commission drops to 15 percent for subscriptions that remain active for more than a year.

Apple said Wednesday developers will automatically get the lower 15 percent rate if they generate $1 million or less in proceeds – defined as the portion of App Store purchases that the developer keeps – in a calendar year.

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

Apple has responded by saying 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.

Cupertino California -based Apple said the new program will start on Jan. 1, 2021.

Software developers who netted less than $1 million from the App Store this year will qualify for the 15 percent rate next year. If the developer’s proceeds rise above the $1 million threshold the next year, Apple’s standard rates kick in for the rest of that year. If the developer’s proceeds fall below $1 million in a given year, they become eligible for the lower rate the next year.

“Small businesses are the backbone of our global economy and the beating heart of innovation and opportunity in communities around the world,” Apple Chief Executive Tim Cook said in a statement.

Apple said it will give more details on which developers qualify next month.

Developers have built businesses while benefitting from the App Store’s global reach encompassing users of the more than 1.5 billion Apple devices in 175 countries and over 40 languages, with more than 180 local payment methods and 45 accepted currencies.

In 2019 alone, the App Store ecosystem facilitated $519 billion in commerce— with over 85 percent of that total accruing solely to third-party developers and businesses.

The App Store, which launched in 2008, is the world’s most vibrant app marketplace, currently offering 1.8 million apps and visited by half a billion people each week.