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As regulators watch closely, Apple announced today that it would cut its App Store commission for small businesses, reducing its reduction from an industry standard of 30% to 15% for those app and game developers making less than $ 1 million. year.
The move could earn Apple points from small app makers that are suffering during the pandemic. But its critics were quick to point out that it wasn’t a big concession or that it would cost the tech giant a lot of money.
Epic Games CEO Tim Sweeney is suing Apple for antitrust violations and has said Apple’s 30% stake is excessive.
“This would be something to celebrate if it weren’t a calculated move by Apple to divide app creators and preserve its monopoly on stores and payments, again breaking the promise to treat all developers equally,” Sweeney said in a communicated to GamesBeat. “By giving special 15% terms to certain robber barons like Amazon, and now independent small businesses as well, Apple hopes to remove enough criticism for them to get away with blocking competition and 30% tax on the most in-app purchases. “
He added: “But consumers will continue to pay inflated prices marked by Apple’s tax. iOS and Android should be completely open to competition in stores and payments, with a really level playing field between platform companies, app builders, and service providers. That, and not manipulating the community with a patchwork of special offers, is the only way to a fair app market. “
Other reactions were less strident.
“For years I’ve been saying privately that it would be nice to have a more progressive approach to the platform’s revenue sharing,” said Zach Gage, the creator of premium iOS games such as Pocket-Run, Sage Solitaire and SpellTower, in a statement. . email to GamesBeat. “It seems simple and obvious, and I’m very excited that Apple is taking this approach.”
The antitrust image
Paul Swanson is an antitrust attorney at Holland & Hart, and he said in an email to GamesBeat that this doesn’t look like a settlement move at all in the lawsuit with Epic Games.
Above: Tim Cook, Apple CEO
Image Credit: Apple
“If anything, it’s more of a stick in Epic’s eye,” Swanson said. “If Apple felt pressured to engage with Epic to resolve this antitrust case, there would be little point in taking action that helps smaller developers keep fees high for Epic.”
He said Apple’s price change does not clearly strengthen or weaken its defense against Epic’s lawsuit. Epic claims that Apple uses its monopoly power to charge arbitrarily high prices for developers to use the App Store and in-app purchases.
“The new Small Business Program doesn’t really change Epic’s concerns,” Swanson said. “If anything, Apple’s decision to price differential could support Epic’s argument that Apple has the power to unilaterally set supracompetitive prices, a hallmark of monopoly power. So from Epic’s perspective, Apple’s price change does nothing to reduce Apple’s monopoly power, which Epic presumably still thinks is illegal. “
While Apple clearly doesn’t want to placate Epic, the move reflects an awareness of the need for good public relations or political savvy.
Apple program
Above: Epic Games has been provocative in addressing its dispute with Apple.
Image Credit: Epic Games
“Regulators are trying to figure out what to do with Big Tech. Given this increased attention, Apple may think that avoiding regulators and legislators is like leaving a bear behind: you don’t have to be an unattractive target, just less attractive than other potential targets of regulators and legislators, ”Swanson said. “Taking action that Apple characterizes as helping small businesses is the kind of small, proactive step that can generate goodwill for Apple in Washington and make other big-tech targets more attractive for regulation.”
Apple’s new small business program will begin on January 1. Fees will be charged based on prior year or 2020 revenue. Small businesses will not get a service cut. Apple will offer the same access to development tools such as Xcode, programming languages, payments, and application programming interfaces.
Apple has 1.8 million apps on the App Store, with a reach of 1.5 billion devices in 175 countries.
Apple said that last year, the App Store generated $ 519 billion in commerce, and more than 85% of that was at the hands of third-party developers. CEO Tim Cook said the vast majority of app developers would qualify for the lowest commission.
In addition to Epic Games, Apple has had battles with Basecamp, WordPress, and others that are part of the Coalition for App Fairness, an advocacy group with developers large and small. Apple also said it would retire Identifier for Advertisers (IDFA), emphasizing privacy over targeted advertising, sparking a major battle with advertisers, including app and game publishers, and mobile marketing companies.
Apple said in a blog post that the program comes at an “important time as small, independent developers continue to work to innovate and prosper during a period of unprecedented global economic challenge. Applications have taken on a new importance as businesses adjust to a virtual world during the pandemic, and many small businesses have launched or dramatically increased their digital presence to continue to reach their customers and communities. “
Above: Tim Sweeney is the CEO of Epic Games.
Image Credit: Epic Games
He said the App Store has been an engine of economic growth that has created millions of jobs and a path to entrepreneurship for anyone with a great idea.
Apple said that earlier this year, an independent study by the Research Group found that Apple’s commission structure is in the mainstream for application distribution and gaming platforms.
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