Apple App Store Commission Rate Is Cut To Half: A Distress Move Or An Olive Branch Offering?

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Apple Inc. (NASDAQ:AAPL) has finally conceded against the millions of app developers and has chosen to treat them fairly.

The iPhone maker has recently announced that they will cut down their currently applicable 30% commission on sales made through its App Store to half from 2021. But there is a catch!

The reduced 15% commission rate, however, wouldn’t be applicable for all app developers. The company has decided to extend the benefits only to those who are making less than and equal to $1 million in sales per calendar year.

In a statement about the same, Apple reasoned that they chose $1 million as a threshold because their studies have found that apps which mint more than tend to find a significant amount of success and thus won’t require to subjected to the reduced commission rate.

They also said, if in any case, a developer dips below the threshold limit of $1 million, they will again start being entitled to the lower rate as usual.

Lower Commission Rate On App Store: Distress Move Or Olive Branch?

This particular move from Apple comes after several years of tussle with close to 28 million developers who adamantly kept complaining about the iPhone maker’s high App Store commissions.

Apple runs its entire ecosystem like a tight ship, which many developers for long have found to be stifling their businesses. For instance, the company has made it mandatory that their users download only verified iPhone and iPad apps which are available via its app store. This means there’s no way developers can promote their offerings independently and instead have to rely solely on Apple’s App Store for making money.

Also, the 30% commission which is currently applicable for all big and small players until the next year, remained static since 2008 when the App Store was first launched. Apart from that, the iPhone maker also charges 30% commission for all in-app purchases which is another issue that has developers have long been complaining about.

Over time, the feud over the exorbitant commissions ballooned up so big that some developers went to the extent of pushing back against Apple as well – Epic Games being one of the most notable amongst them.

The developer of the top-rated game Fortnite sued the tech giant in August over its commission structure after which it exited from the Apple Store. Epic Games, in a statement, said that their 12% fee for games developers sell through its own marketplace is way fairer than what Apple has been charging because it allows developers to put more funds into the development.

Thus, seeing how the issue cannot be put to rest, Apple must surely have realised that sooner or later they need to concede, and this is where the cut down of the commission rate enters.

Now, this can either be viewed as a ‘distress move’ or an olive branch offering, but it doesn’t change the fact that Apple is still very much in control of their entire app ecosystem and can choose to stifle developers whenever they want.

That being said, going forward app developers will surely appreciate the reduced commission rate for the time being as it will allow them to fund further projects, take more risks or work on newer ideas. We will keep you updated on all future developments. Until then, stay tuned.


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