Apple cuts App Store fees in half to 15 per cent for small developers earning less than US$1 million
- Apple said it is cutting App Store fees in half to help small businesses during economic upheaval caused by the Covid-19 pandemic
- The move comes as Apple faces increasing scrutiny from government regulators and companies like Fortnite maker Epic Games over high App Store fees
Apple is cutting by half the fees charged to most developers who sell software and services on the App Store, marking the biggest change to the store’s revenue structure since the iPhone maker launched the service in 2008.
The company is lowering the App Store fee to 15 per cent from 30 per cent for developers who produce as much as US$1 million in annual revenue from their apps and those who are new to the store. The change will go into effect January 1 as part of an App Store Small Business Program, Apple said Wednesday in a statement. The company said the new structure will apply to the “vast majority” of developers who charge for apps and in-app purchases on Apple’s devices. The program won’t affect some major apps such as those from Netflix and Spotify Technology.
The Cupertino, California-based technology giant said it’s making the change to help small developers financially and to provide a way for them to invest in their businesses amid the economic struggles caused by the Covid-19 pandemic.
Apple has faced ongoing scrutiny from government regulators and criticism from developers about the percentage of revenue it takes for App Store purchases. The company also is engaged in a lawsuit with Epic Games, the maker of the video game Fortnite, over its App Store fees and payment rules. Alphabet’s Google also charges similar fees to developers on its Android app store.
Income from app developers has been key to Apple’s growing services business, which reached almost US$54 billion in revenue in fiscal 2020. The App Store is one of several products and offerings that make up the services unit, but is the biggest revenue driver, according to Toni Sacconaghi, an analyst at Sanford C Bernstein. He estimates the App Store alone will bring in US$18.7 billion in 2021, about a third of Apple’s total services revenue next year.
Apple has said there are 1.8 million apps in the App Store across all of the company’s platforms and more than 28 million registered developers. The company said earlier this year the store has generated US$155 billion for developers since it started.