ITP Techblog

Apple will cut in half the commission it takes from software developers selling apps in its App Store, but only for developers with revenue of up to US$1 million a year.

The App Store Small Business Program, which will be available to most developers who stay below that revenue threshold, goes into effect from January 1, 2021. It will see Apple's cut of paid app revenue and in-app purchases fall from 30% currently to 15% and comes as Apple has faced heat from iOS developers and politicians in the US Congress over what is considered monopolistic and anti-competitive behaviour in the way it controls access to the App Store and requires payments be made through its platform.

Just how many of the 28 million registered 28 iOS developers make less than US$1 million (NZ$1.45 million) in revenue from the App Store each year? According to app store analytics provider Sensor Tower, the move will make 98% of iOS developers eligible for the reduced fee rate. But those developers account for only 5% of App Store revenue, so the impact on Apple's bottom line will be tiny.

$1.45 million - the revenue threshold for Kiwi developers

Still, the lower fee rate will appeal to New Zealand iOS developers trying to elbow their way up the rankings in the App Store and particularly those selling niche apps that consistently generate hundreds of thousands of dollars of revenue each year. 

Apple will take applications for the scheme and base admission to it on 2020 revenue. Going over the $1 million threshold will see developers have to pay the full 30% rate while developers who dip under the threshold will see their fees reduced.

in launching the scheme, Apple CEO Tim Cook said small business was "the backbone of our global economy and the beating heart of innovation and opportunity in communities around the world".

"The App Store has been an engine of economic growth like none other, creating millions of new jobs and a pathway to entrepreneurship accessible to anyone with a great idea. Our new program carries that progress forward - helping developers fund their small businesses, take risks on new ideas, expand their teams, and continue to make apps that enrich people's lives," added Cook.

Apple will clearly win goodwill from smaller developers, but halving commission won't apply to the major app developers who are increasingly critical of Apple's commission rates and payment options. Apple most high-profile fight has been with game maker Epic, which yesterday said it was taking legal action against Apple in Australia, the latest salvo in an acrimonious fight that centres around Apple's insistence that it takes a share of game revenue from Epic's best-selling game Fortnite.