Apple’s 30% commission on certain apps is one of the main areas Apple CEO Tim Cook was grilled on during Wednesday’s U.S. House Judiciary antitrust subcommittee hearing.
However, according to internal emails revealed as part of the inquiry, Apple previously considered increasing its cut from 30% to 40% in some cases.
The suggestion surfaced way back in 2011. In an email to other Apple execs in March that year, Eddy Cue, Apple’s senior vice president of internet software and services, wrote: “For recurring subscriptions, we should ask 40% of the first year only but we need to work a few deals to see what is right. I think we may be leaving money on the table if we just asked for about 30% of the first year of sub.”
Documents from the Hearing on “Online Platforms and Market Power: Examining the Dominance of Amazon, Apple, Facebook and Google" pic.twitter.com/42o2Ye13jI
— House Judiciary Dems (@HouseJudiciary) July 29, 2020
Today, Apple charges developers with recurring subscription revenue 30% in their first year. This then drops to 15% for subsequent years. However, some developers argue that this is still too high.
App Store commissions
Cue’s email was likely turned over to investigators after a request made to Apple execs last year. Congress asked Cook and others to make their emails available as part of the antitrust probe.
It’s not clear why Apple decided against ramping up prices — and even how seriously the suggestion was taken. The App Store, which launched in 2008, was still in its relative infancy at the time Cue made his suggestion.
Cook was quizzed on the idea of Apple increasing its App Store fees during Wednesday’s hearing. Rep. Hank Thompson (D-Georgia) asked Cook what was to stop Apple increasing its commission to 50%.
Cook said Apple had never increased its fees. He also made it sound as though the company would not consider doing this, since it could put top developers off wanting to use the App Store.
“There is a competition for developers just like there’s a competition for customers,” Cook said. “And so the competition for developers, they write their apps for Android or Windows or Xbox or PlayStation. So we have fierce competition out the developer side and the customer side.”
Cook also stated that 84% of apps in the App Store are charged nothing.