App Store Small Business Program, designed to accelerate innovation features a reduced commission rate of 15% on paid apps and in-app purchases
As part of its Small Business
Apple announces the opening of registrations for its Small Business program, which will allow developers to benefit from the 15% discount offer on the commission of its application store. The move comes at a time when more and more application developers are joining forces to change the App Store's operating rules, which are based on high commissions and a lack of freedom of choice.
The Small Business program is open according to the following (non-exhaustive) list of terms:
· Companies that have earned up to $1 million in the year just ending. New businesses are considered.
· If a developer's revenues fall below the $1 million threshold in a subsequent calendar year, he or she is eligible to receive the 15% commission again the following year.
· If a participating developer exceeds the $1 million threshold, the standard commission rate will be applied for the remainder of the year.
Apple is setting the December 18, 2020 deadline for submission of entries. After that date, developers will have to wait a couple of weeks to see the reduced commission rates after approval.
Since August, Apple and Google have been engaged in a battle against Epic Games. Indeed, in an attempt to rebel against the commissions imposed by Apple and Google on developers, Epic has decided to add an alternative payment method (direct payment to Epic) to its Fortnite game to allow users to make in-game payments using a channel other than the one allowed by Apple and Google. It goes without saying that by using Epic's direct payment, Google and Apple would no longer receive the 30% commission they typically charge on purchases made through the applications installed through their online application stores. In retaliation for Epic's action, Apple and Google were quick to take action and immediately evicted Fornite from their respective platforms because, according to the two giants, Epic had violated their application store policies.
If Apple and Google did not take half a step and reacted firmly by banning Fortnite from their respective stores, it's because there is a lot at stake. As far as Apple is concerned, for example, when a developer wants to publish an application on the App Store, he must first pay $99 a year to have a developer account. And for each published application, Apple will receive a 30% commission on the price of the application (if the application is paid for) and 30% on payments made into the application to unlock a feature or access an additional service. In the case of a subscription, the same 30% rate applies for the first year and increases to 15% in the second year. So for a developer who wishes to publish his application on the App Store, he should expect to receive 70% of the amount of sales obtained with his application. However, for revenues obtained with advertising integrated into applications or with sales of physical merchandise, the developer receives 100% of the sale price.
On the Play Store, the same 30% principle applies whether for paid applications, integrated payments or subscriptions (for the first year). Since January 1, 2018, Google's commission has increased to 15% for subscriptions that are retained after one year.
With this compensation system for developers and platform vendors, Apple has reported paying $155 billion to developers since 2008. If we consider that in January 2019, the company had declared that it had paid out $120 billion, this means that in 2019, $35 billion has been paid out to developers. From this, we can conclude that Apple alone received about $15 billion for the year 2019 alone, compared to $35 billion for all developers of the iOS platform. And as far as Google's earnings are concerned, the amounts are in billions of dollars as well.
With this commission that allows Apple and Google to earn high amounts, some point to the fact that these two companies that dominate the mobile market make no effort to lower this rate. By applying this 30% commission, not only does it increase the price of the application for sale, but it reduces the earnings of developers, point out some publishers. For their part, the two giants defend their position by explaining that these application platforms require heavy investments in personnel, hardware resources, hosting, and many other expenses. In addition, they explain that if an application is published for free, they do not require any commission from the developer. Only paying applications or applications that integrate purchases are taxed.
Read more: Could Apple Harm Facebook's Business Model?
Given the huge amounts received by owners of application distribution platforms with this 30% commission, which some consider too high, Epic had already expressed its displeasure in 2018 by setting aside the Play Store at the launch of Fortnite. Users were invited to download Fortnite directly from the publisher's website. This had also prompted other publishers such as Tinder and Netflix to follow suit. However, 18 months after it had rejected the Play Store, Epic Games reversed its decision and announced in April that it was difficult for application publishers to do without the Play Store, denouncing the use of commercial techniques and measures used by Google to block software obtained outside the Play Store. And on the App Store, the problem is more pronounced because it is almost impossible to install applications on the iPhone and iPad from other online stores.