Apple is dropping its cut of most App Store sales to 15 percent

Apple is dropping its cut of most App Store sales to 15 percent
Editor at TechForge Media. Often sighted at global tech conferences with a coffee in one hand and laptop in the other. If it's geeky, I'm probably into it.

Apple’s cut from most sales on the App Store is dropping to 15 percent in January following increasing pressure.

In an announcement on Wednesday, Apple said its new App Store Small Business Program will enable any developer which earns under $1 million in sales per year to keep more of their revenue.

The previous 30 percent cut Apple took from App Store transactions has come under increased scrutiny over the past year. Apple says the “vast majority” of iOS developers will qualify for the new program.

Apple generates around $50 billion per year from the App Store and has been criticised as taking an unfair cut of developers’ work.

The 30 percent cut has come up in antitrust cases as Apple does not officially support the installing of alternative app stores or sideloading apps.

“The 30 percent rate is still highway robbery, as Congressman Cicilline recently said in an interview, but the fundamental problem for us is the lack of choice,” wrote Basecamp CEO Jason Fried in a letter earlier this year.

“And Phil Schiller’s suggestion that we should raise prices on iOS customers to make up for Apple’s added margin is antitrust gold.”

In October, Apple refuted a US antitrust report – which accused the company of running a monopoly – claiming that developers are the “primary beneficiaries” of the App Store.

During an antitrust hearing earlier this year, Microsoft president Brad Smith argued the App Store impedes competition far more today than when his company was found guilty of antitrust practices back in 2001.

While the Microsoft Store is nowhere near as popular as the App Store, the company has set a much fairer example. Microsoft’s store lets developers keep a 95 percent cut if the app was directly linked to from outside the store, or an 85 percent cut if it was downloaded through Microsoft marketing it.

The European Commission is among the legislative bodies which have open investigations into the App Store’s practices due to complaints filed by companies including Spotify and, reportedly, e-reader app Kobo.

Time will tell whether the reduction to a 15 percent cut is enough to take at least some of the heat off Apple, but it’s certainly a welcome start.

The App Store Small Business Program launches on January 1st, 2021. Developers will need to apply for the program and won’t be automatically enrolled.

(Photo by Sara Kurfeß on Unsplash)

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