Apple will cut App Store fees in half for small-business developers of iPhone applications. But while the change sounds dramatic, it will actually lead to a relatively tiny reduction in Apple’s revenue, according to a market-research firm.
A new App Store Small Business Program drops fees from 30% to 15% for developers who earn less than $1 million a year in app revenue and in-app purchases. And that’s a huge number of devs. About 98%, according to Sensor Tower, a company that tracks the performance of Apple’s App Store and Google Play.
But this market-analysis firm also indicates that Apple won‘t see a large reduction in revenue from cutting the fees for small developers because a few large developers generate the lion’s share of money from the App Store. For example, in Q3 2019 the top 1% of earners generated $20.5 billion in revenue. The remaining 99% took in $1.5 billion, or 7% of the total.
Large developers criticize App Store fee reduction for small businesses
iPhone developers in the 1% were highly critical of Apple’s move to lower App Store fees for small-business developers.
“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,” said Tim Sweeney, the CEO of Fortnite developer Epic Games, in a statement. Epic and Apple are in the middle of a legal battle over App Store fees.
The music-streaming service Spotify said a statement, “Apple’s anti-competitive behavior threatens all developers on iOS, and this latest move further demonstrates that their App Store policies are arbitrary and capricious.” Spotify is a frequent critic of Apple, who it accuses of giving unfair advantages to its own service, Apple Music.
The Coalition for App Fairness, is a group of developers formed to fight App Store policies. It includes Spotify and Epic Games, but also MatchGroup, Tile and others. A statement from the group calls the $1 million cutoff arbitrary, and insufficient to run a small business. “Subtract 30% to Apple, 20% to marketing, 30% to taxes and you’re left with enough to possibly build and maintain the product — but forget about paying your employees or making a profit.”