From the beginning of the coming year, Apple will reduce commissions it charges for the app store by 50% for many developers as an intense debate picks momentum. It is about whether this iPhone manufacturer has been utilizing this cash to increase its profits unjustly and silence competitors against its video, music, and different subscription services.
On Wednesday, the concession declared it would reduce Apple’s in-app subscription commissions, and other purchases from the 30% rate implemented from 2008 to 15%, starting on 1 January.
However, the discount is only available to developers whose app store income is $1 million yearly. This threshold includes the creators of various very famous apps, which are downloaded on iPads, iPhones, and other devices from Apple. That group features a couple of Apple’s strongest critics; Spotify, which provides a music streaming service, and Epic, the Fortnite, creator of the famous video game.
These two firms have facilitated the increase in the study of app store activities in Apple among the U.S., and European regulators and lawmakers. Apple sells video and music streaming services, which have helped prevent the decrease of iPhone’s profits in the past few years.
The commissions from the app store support Apple’s services division and their profits rose by16% to almost $54 billion during the firm’s final fiscal year that ends in September. The only sales that produce more yields for Apple compared to the services are iPhone sales.
Apple’s fee decrease is a method of assisting many of the firms that provide its store with about 1.8 million apps in these turbulent times triggered by the pandemic. Sensor Tower, a mobile analytics firm, says that around 98% of the app developers make less than $1 million in profit yearly.
However, probably the decreased commission will not affect Apple’s income. The reason is small developers contribute around 5% of Apple’s app store income to become eligible for the reduction, based on estimates from Sensor Tower. It might be why investors appeared unmoved by the impending fee reduction from Apple. During the trading, early in the afternoon, the firm’s shares increased a bit.
In a statement, Spotify dismissed Apple’s reduced commission,
describing them as ‘window dressing’ to put off regulators who intend to investigate their practices.
At the beginning of this year, Epic sued Apple, and it continues to pursue the lawsuit to win trading rights for its apps’ products without paying Apple’s fees.
In the meantime, a group called the Coalition for App Fairness, a non-profit based in Washington, demand ‘fair treatment’ on the methods tech giants use to operate their app stores. Some of its members are Spotify, Match Group (an online dating app maker), Epic, and different members like Basecamp, ProtonMail, Tile, and media industry associations from Europe.
Regulators in Europe are investigating the mobile app store from Apple and their payment platform; they are worried that it interferes with the competition. It is one of the steps the EU has taken to fight the big tech companies’ control.
Tim Cook, Apple’s CEO, termed the fee decrease as a step that would benefit all parties concerned.
Cook issued a statement and said, ’We are starting this program to assist the owners of small businesses in creating the next app store’s story of uniqueness and success.’
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