Apple changes App Store fee [Updated: Google too]

Google changes its fees following Apple's model

It's hard to condense what happens into a title on the one hand and induce why it happens at the same time, but that's what we've experienced.

Apple yesterday released a statement warning that a new regulation regarding the fees charged for selling apps on the App Store will come into effect in December. These rules affect especially small developers, since the limit to benefit is to earn less than a million dollars in the App Store.

If this is the case, the commission Apple will keep will be 15% instead of 30%. An important figure that will now remain in the pockets of the creator, rather than in the intermediary.

While anything that benefits those who make the App Store the world's largest software store is welcome, there's no doubt that Apple's scrutiny has motivated, or at least prompted, to move a listing. before the situation reaches an irremediable point.

According to Apple, the idea comes to compensate the developers for how difficult the year 2020 was. Here is what they say (translated from English)

Apple announces the Small Business program on the App Store

Apple announced an industry-leading developer program to accelerate innovation and help small businesses and independent developers jumpstart their businesses with innovative apps on the App Store. The new App Store Small Business program will benefit the vast majority of developers who sell digital products and services in the store, allowing them to benefit from a reduced fee on paid apps and in-app payments. Developers can apply for admission to the program and their commission reduced by 15% if they have earned less than $ XNUMX million in the previous year. 

The App Store Small Business program will launch on January 1, 2021 and comes at an important time for small independent developers to continue working to innovate during a period of unprecedented global economic challenges.

Apps have taken on new importance as businesses adapt to a virtual world during the pandemic, and many small businesses have significantly launched or developed their digital presence to continue reaching their customers and communities.

The program's reduced fee means that small developers and aspiring entrepreneurs will have more resources to invest and grow their business in the App Store ecosystem.

While full details will be known in early December, the basics of the program are simple: 

• Existing developers who earned less than $ 2020 million in XNUMX across their apps, as well as new developers in the App Store, can apply to join the program and benefit from the reduced commission. 
• If a participating developer exceeds the $ XNUMX million mark, the standard fee will apply for the remainder of the year.
• If a developer sees their business dropping below $ 15 million the following year, they can re-apply to join the program and benefit from the XNUMX% commission the following year. 

The standard App Store fee of 30% remains in effect for apps that sell digital goods and services and earn more than $ XNUMX million a year, which is the after-commission earnings.

Earlier this year, an independent study conducted by the Analysis Group found that Apple's fee structure is typical of game and app distribution platforms.

Why now?

As we have reiterated on numerous occasions, such as in the article on the comparison with Fortnite, a narrative of abuse of power is being built, both by some developers, who want to enjoy everything without having to pay anything, as for governments, increasingly attracted from the mere fact that Apple (and Amazon, Facebook and Google) are big and therefore have to pay for it.

Antitrust investigations that have been launched in various countries, sometimes at the request of developers and others directly from politics, try to be able to impose sanctions or alter the market to favor locals, without necessarily feeling tied to its fairness or not.

It is about politics and money, the two things that most pervert the spirit of the law.

The shadows of Apple's proposal

Although the complete and definitive wording has not yet been published, the approach leaves an obscure area for developers, which is the one that approaches the million euros (843 thousand euros), the threshold to be able to benefit from the reduced commission of the program. App Store.

If a developer comes close to that magic number, they might be more interested in removing the app from the App Store than risking over a million dollars in sales and paying the 30% commission. (If you win $ 999.999 (-15%) you have $ 849.999 left and if you win $ 1.000.001 (-30%) you would have won $ 7000.000)

The way to solve this situation, without the developer having to worry about monitoring his income statement, would be to apply the percentages on the corresponding tranches, that is, up to one million dollars, 15% and on what exceeds one million. dollars, 30%.

Even better would be to put a percentage scaling of up to 30%, per profit tranche, so that the jump is less abrupt and there is a real incentive to continue making money by selling on the App Store.

But for all this we will have to wait until December.

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Google follows Apple's lead by cutting fees to the same level and threshold as the Cupertino company. Google has decided to reduce the transaction fee on Google Play to 15% for those companies that make less than a million dollars, just like the Small Business Program that Apple has set up. 

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"> The 30% commission paid for purchases in the Google Play Store will be reduced to 15%, as announced by Google. The change, which will begin to apply on July 1, will apply to the first million dollars that is generated using the payment mechanism of the Play Store every year.

Once the developer is over $ 30 million in a year, the commission will return to the usual 15% level. At the end of the year, the commission will again be reduced to XNUMX% to exceed $ XNUMX million in sales and purchases through the app. 

This is the big difference between Google's recently announced programs and Apple's.

In Apple's Small Business Program for the App Store, if a developer exceeds $ 1 million, they cannot qualify for next year's new. If their benefits fall below $ XNUMX million in the following year, they can apply for readmission to the program for the following year.

That is, if you sell $ 1.000.001, one year you pay 15% commission, the next year 30%, and (if you sold less than a million that year) the next 15% again.

Google's version calculates a million a year and the following year it will start counting from scratch again, regardless of what you earned the previous year.

Opinion

These arbitrary fees seem increasingly out of place in an established economy where the vast majority of apps are sold through manufacturers' stores.

With the millionaire profits they are generating for their administrators, these divisions by scale make no sense, as if a developer who sells one million is costing Apple and Google more money than ten million in sales.

From our point of view, the dualism "I force you to use my shop" and "I charge you the commission I want" is no longer sustainable.

If you want to charge a high commission, but your store is the best and safest, let the developers sell wherever they want.

If you force them to use your shop, you need to rationalize your commissions so that they fall into "fair trade" and not "extortion".

We already know that everything is arbitrary, but these equally arbitrary downgrades show that everything could be much more beneficial to the developer with a bit of willpower on the part of Apple and Google.