Apple is cutting App Store fees in half for the majority of developers

Daniel Cooper
·Senior Editor
·2-min read

Apple has announced that it will cut the amount of commission it charges app developers as part of a new Small Business Program. Developers earning less than $1 million a year will now pay 15 percent on all transactions, half the current rate of 30 percent. Apple says the program, which begins on January 1st 2021, will apply to app sales and in-app purchases, and benefits the “vast majority” of developers on the platform. CEO Tim Cook says that “small businesses are the backbone of our global economy” and that the program will help them “write the next chapter of creativity and prosperity on the App Store.”

The company will outline a more detailed set of rules in future, but the basic gist is that any company making less than $1 million only pays 15 percent commission. When their fees hit that threshold, the 30 percent commission rate will kick in for the rest of that year. Should their future revenue fall back down below $1 million, they’ll automatically return to the cheaper tariff.

Bigger businesses making more than $1 million a year will see no change to their business with the 30 percent rate remaining in place. And Apple says that the fees it takes are used to provide a safe, secure app development and sales platform for developers and users alike. Not to mention that it enables these companies access to a market of around 1.5 billion Apple devices in use around the world.

Apple’s commission rate has been an article of faith ever since the earliest days of the App Store, and one adopted by many other app platforms. But some developers have chafed at Apple’s control of the app review process, and feel the 30 percent cut is unfair. Fortnite developer Epic Games, for instance, intentionally broke the App Store rules on in-app purchases in protest at the current regime. In response, Apple banned Epic from the App Store until such time as it complies with the rules — a battle that is currently running through a number of courtrooms around the world, including Australia.

Epic’s skirmish, which is backed by other players like Microsoft, is leading to a growing chorus of discontent about how the App Store is run. There has been an undercurrent of concern that an antitrust complaint will be lodged against Apple, which could force it to open up the iOS app platform. By lowering the fees for smaller developers, Apple may be able to head off criticism that it’s behaving unfairly toward the very people who add so much value to its ecosystem.