Apple Reduces App Store Charges by Half for Smaller Creators Amidst Growing Antitrust Speculations
Epic's legal battle against Apple over the tech giant's App Store fees might be stuck in the slow-moving gears of the court system, but Apple's already started reassessing its payment strategies. On Wednesday, Apple announced a reduction in its 30% commission from transactions on its app store to just 15% for developers who made less than a million dollars the previous year. This reduced fee will apply to developers until they surpass the million-dollar mark or Apple decides to end the program.
Amidst EU antitrust investigations, Epic lawsuits, and mounting criticism from US lawmakers, Apple is spinning its rate reduction as a helping hand for struggling entrepreneurs in the wake of the pandemic. The company wrote, "The program's reduced commission means small developers and aspiring entrepreneurs will have more resources to invest in and grow their businesses in the App Store ecosystem."
Apple can now boast about assisting the little guy even as it maintains its sizable profits from larger companies. This divide-and-conquer approach allows Apple to retain its 30% rate for big businesses while alleviating some of the pressure off smaller developers.
Over the summer, David Heinemeier Hansson of Basecamp got into a public feud with Apple over its fees for the company's Hey! email app on iOS. After Apple's announcement, Hansson tweeted, "splitting the App Store opposition with conditional charity concessions, they – a $2T conglomerate – get to paint any developer making more than $1m as greedy, always wanting more. As clever as it is sick."
Apple assured developers who join the program and surpass the million-dollar revenue threshold that they will keep the reduced rate for the remainder of the year. Although it's not an entirely progressive tax, it at least saves developers from panicking at the sight of the $999,999 figure.
Hansson made his demands clear, tweeting, "THIS ISN'T SOME RADICAL SCHEME!! This is how software is sold in the Mac, how it's sold on Windows, how it's sold on the web."
Apple's move to reduce fees for smaller developers is in response to several factors, including pressures from regulatory bodies and antitrust scrutiny. China, for instance, may probe Apple's App Store practices, requiring alternative payment options to foster a competitive local app market. Regulatory bodies in the UK and US are also scrutinizing Big Tech companies, alleging that excessive commission rates create a monopoly in the app distribution market.
As Apple navigates regulatory challenges and public criticism, it promotes the fee reduction as a supportive measure for budding entrepreneurs impacted by the pandemic. The tech giant asserts, "Smaller developers and aspiring entrepreneurs will have more resources to thrive in the App Store ecosystem with the program's reduced commission."
In the wake of Apple's announcement, developers eagerly await the opportunity to benefit from the reduced fees, even as they approach the million-dollar revenue threshold. Technology expert David Heinemeier Hansson of Basecamp expresses optimism, stating, "At least this saves developers from panicking at the sight of the $999,999 figure."
