|Apple Is Playing With Us - App Store Tax Cut To 15%|
|Written by Mike James|
|Wednesday, 25 November 2020|
The headline news is that Apple has cut the percentage it takes from the App Store to 15%, down from 30%, but only if you don't earn more than $1 million per year across all your apps.
With the anti-competitive machinery just warming up and the lawsuit with Epic Games in the offing, Apple has just done a very smart and possibly cynical thing. It has reduced its take from the App Store. Now any developer who's apps earn less than $1 million in the last year will only pay 15% to Apple. Given that most of the developers in the App Store don't earn anything like a million dollars, this is a bribe to the majority of programmers to support Apple even more than they did. Three cheers for Apple's generosity, but you can't help but wonder why now and what the effect will be.
The best you can say is that the timing is suspicious. Apple could have made a similar gesture at any time in the past to help out struggling devs, but only now does it happen. It also doesn't really hit Apple's bottom line as the App Store has lots of small to close to zero earners and a small number of big earners. The New York Times quotes the figures that 98% of the apps in the Store will be on the lower rate but this will only reduce Apple's income by 2.5%. Some gesture - you have to admire the cunning.
Epic Games CEO Tim Sweeney said:
"In some ways, it's a really great progressive improvement for these small developers, but also a cynical ploy to divide and conquer"
Yes, never has 98% of a customer base been bought so cheaply.
There is also the interesting creation of a profit ceiling. If you make $1,000,000 you are going to be much worse off than if you make one $999,999.99. Will devs think up ways of reducing their earnings to increase their effective earnings - probably as they are computational thinkers. Look out for free offers and reduced prices near the end of the App Store year.
Apple has been quick to post quotes from small devs saying how great this opportunity is, but this really isn't the point. As we have explained many times, it is not the rate that Apple charges that is the problem - although 30% might be high for low earners. The real issue is that Apple has a monopoly and absolute control. There is no competition to prove that 30% is a reasonable fee and no competition to make Apple run the App Store fairly. In disputes Apple is judge, jury and executioner and, until recently, there was no right of appeal.
Now you can appeal and you can suggest changes to App Store rules - but Apple is still the final authority. To a great degree this recent change (August 2020) makes you think why was it not like this from the start? "Now you have a way to appeal" confirms that previously you didn't! Despite small changes in governance, the App Store still needs either an independent overseer or, more simply, free competition.
It is an interesting question of how much the fee reduction changes the situation. The bigger companies, notably Epic Games, are still not happy and the lawsuit continues. So do efforts to get around Apple's monopoly via web apps. We are all aware of Apple's less than convincing support for web apps, but the latest move is that Google is bringing its game streaming system, Stadia, to iOS as a web app and Microsoft is doing the same with xCloud.
Even here Apple isn't letting go of its iron grip. After initially banning such services, now Apple is letting them on its platform, but each game has to be submitted to the App Store.
There seems to be no technological solution to the problem - Web Apps on iOS just don't work well enough. Clearly the only way to get competition in the App Store is to follow Epic's example and confront the problem in court.
Fear and Loathing In The App Store
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|Last Updated ( Wednesday, 25 November 2020 )|