Apple to cut down App Store share to 15% for small developers
The company's new App Store Small Business Program means studios earning less than $1m a year in proceeds will benefit from a reduced commission
Apple announced a new initiative called the App Store Small Business Program, reducing the fee developers have to pay to use the iOS store.
From January 1, 2021, companies who have earned less than $1 million during the previous calendar year will only need to pay a 15% commission on their App Store revenue from apps and in-app purchases, Apple said.
Apple's share will remain 30% for developers earning more than $1 million per year. More details about the initiative will be released in early December.
To be eligible for the App Store Small Business Program from 2021, you need to have earned less than $1 million in proceeds in 2020, across all of your apps on the App Store.
You can apply if you're new to the App Store too, but if you go above the $1 million limit at some point during the year, the standard rate will apply for the remainder of the year. On the other hand, if your revenue falls below the threshold during the year, you can't requalify for the reduced cut until the following year.
Apple CEO Tim Cook said that small businesses are the "backbone" of the economy worldwide, which is what has driven this change in policy.
"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," he commented.
Apple's 30% cut has been under fire this year, and at the heart of its dispute with Fornite developer Epic Games. Back in August, Apple removed Fortnite from the App Store as Epic implemented direct payments in the game in an attempt to avoid Apple's commission. Epic's CEO Tim Sweeney had always been critical of the iOS store's model, saying in July that Apple had "gone crazy." Around the same time, the European Commission opened an antitrust investigation into Apple.
Epic filed an antitrust lawsuit against Apple in August, with the tech giant responding with a countersuit in September. In the latest development of the dispute, a judge dismissed Apple's claim of theft.
While there seems to be a general agreement between developers that 30% is too high, GamesIndustry.biz contributing editor Rob Fahey highlighted in July that there's little consensus on an alternative number.
Update: Mobile tracking firm Sensor Tower sent over some statistics to put the significance of Apple's move in context. The firm said 97.5% of the publishers it tracks generated less than $1 million on the App Store last year, but they collectively accounted for just 4.9% of the platform's total revenues.
Additional reporting by Brendan Sinclair.