Apple to Reduce App Store Fee to 15 Percent for Most Developers

Posted on November 18, 2020 by Paul Thurrott in Apple, iOS, iPadOS, Mobile with 65 Comments

With multiple threats of antitrust action looming against it, Apple has finally bowed to common sense and is lowering its App Store fees for developers. No, not across the board, this is Apple. But it’s the first major crack in an unfair and illegal system that has been harming developers and thus customers for years. It comes via a new developer program called the App Store Small Business Program that Apple says will “benefit the vast majority of developers who sell digital goods and services on the store.”

The App Store Small Business Program launches January 1, 2021, and it provides qualifying developers—those that make less than $1 million per year in the App Store, literally 98 percent of them—with a reduced commission of 15 percent on paid apps and in-app purchases. That’s half the current rate of 30 percent, and it means, in Apple’s words, that “small developers and aspiring entrepreneurs will have more resources to invest in and grow their businesses in the App Store ecosystem.”

“Small businesses are the backbone of our global economy and the beating heart of innovation and opportunity in communities around the world,” Apple CEO Tim Cook said in a prepared statement. “We’re launching this program to help small business owners write the next chapter of creativity and prosperity on the App Store, and to build the kind of quality apps our customers love.”

Under the terms of this new program, existing developers who made up to $1 million in 2020 on the App Store, and any new developers, can qualify for the program and the reduced commission. Should a developer passes the $1 million threshold, the standard 30 percent commission will apply for the year. And if the developer’s business falls below $1 million in subsequent years, they can qualify for the reduced commission again.

Will this be enough to call off the antitrust hounds? Of course not: Most agree that Apple’s fees should be closer to 3 or 4 percent, and a former Apple engineer in charge of the App Store has publicly stated that the service is run at a massive profit and that Apple’s fees and rules are arbitrary. But halving the fees for most developers is still a savvy move. And is long overdue.

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