Apple takes a 30% cut of most purchases made on the App Store, although the commission drops to 15% for subscriptions that remain active for more than a year.
The iPhone maker said developers will automatically get the lower 15% rate if they generate $1 million or less in proceeds – defined as the portion of store purchases that the developer keeps – in a calendar year.
Apple’s App Store fees and rules have come under fire from large firms such as Microsoft Corp, Spotify Technology, Match Group Inc and Epic Games as well as startups and smaller companies that allege the fees deprive consumers of choices and push up the price of apps.
“This would be something to celebrate were it not a calculated move by Apple to divide app creators and preserve their monopoly on stores and payments, again breaking the promise of treating all developers equally,” Epic Games Chief Executive Officer Tim Sweeney said. Epic Games is the developer of the popular game, Fortnite.
In reply to its critics, the iPhone maker has previously said its rules apply evenly to developers and that the App Store provides an easy way to reach its huge base of users without having to set up payment systems in the 175 countries where it operates.
The move will affect a broad swath of developers, but it was unclear how big the financial impact would be for Apple.
Based on the publishers it tracks, analytics firm Sensor Tower said 97.5% of iOS developers generated less than $1 million per year in gross consumer spending. But those same developers contributed only 4.9% of the App Store’s 2019 revenue.
However, Gene Munster of Loup Ventures, a longtime Apple analyst, estimated the small developers covered under the program make up 20% of Apple’s App store revenue. He lowered his estimate for Apple’s store revenue in its next fiscal year to $14.2 billion, a $1.6 billion reduction from his estimate before the policy change and about 0.5% of Apple’s overall revenue.