Apple slashes controversial App Store fees for most developers

Technology

FILE – In this June 16, 2020, file photo, the sun is reflected on Apple’s Fifth Avenue store in New York. Apple will cut its app store fee in half from 30% to 15% for most developers beginning Jan. 1, the biggest change in its commission rate since the app store began in 2008. The fee reduction will apply to developers who made up to $1 million from the app store in 2020, which is the “vast majority” of developers in the store, Apple said. (AP Photo/Mark Lennihan, File)

Apple is chopping by half the long-controversial commissions it charges on the sale of apps and services sold by smaller developers on its App Store, saying it wants to help them grow their businesses amid the economic upheaval caused by the pandemic

The new program takes affect January 1, and impacts those making up to $1 million a year in app sales, the Cupertino, California-based technology company said Wednesday in a statement

Apple will reduce to 15% from 30% the App Store fee for those developers, along with those new to its store. The revised payment structure will affect the “vast majority” of developers who charge for apps and in-app purchases on Apple devices, the company said.

The smaller commission will help “developers fund their small businesses, take risks on new ideas, expand their teams and continue to make apps that enrich people’s lives,” Tim Cook, Apple’s CEO, said in the news release.

The announcement certainly is well timed for smaller businesses that could use the price break. It comes amid anti-trust scrutiny from government regulators and ever-louder criticism from developers about the chunk of revenue Apple takes for purchases in its App store. 

Epic Games, the maker of the popular video game Fortnite, sued Apple in August in a spat involving the fees, which are akin to those charged by Google on its Android app store. The following month, more than a dozen companies and groups formed the Coalition for App Fairness to fight the “app tax.” 

Major apps including Spotify won’t be impacted by the change. The audio-streaming subscription service quickly dismissed the significance of the new program and bashed Apple for what it called “anti-competitive behavior.”

“Apple’s tying of its own payment system to the App Store and the communications restrictions it uses to punish developers who choose not to use it, put apps like Spotify at a significant disadvantage to their own competing service,” a Spotify spokesperson said in an email to CBS MoneyWatch. “We hope that regulators will ignore Apple’s ‘window dressing’ and act with urgency to protect consumer choice, ensure fair competition and create a level playing field for all.” 

One small developer also publicly voiced discontent with Apple and its dominance of the app market. “If you’re a developer making $1m, Apple is still asking to be paid $150,000 just to process payments on the monopoly computing platform in the US. That’s obscene!” Basecamp Chief Technology Officer David Heinemeier Hansson tweeted. 

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