Apple, Under Pressure, Slashes App Store Fees For Small Businesses

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Tech giant Apple Wednesday unveiled a new developer program that reduces App Store commissions by half to 15% for businesses earning up to $1 million a year.

It said the goal is to “accelerate innovation and help small businesses and independent developers propel their businesses forward with the next generation of groundbreaking apps on the App Store.”

Apple has been under increasing pressure this year over fees it charges for transactions through its ubiquitous app store, including a highly public legal battle with Fortnite creator Epic Games and mounting antitrust sentiment among regulators and politicians on Capitol Hill who are questioning the market power of social media and tech giants.

The Department of Justice and a number of state attorneys general recently filed antitrust claims against Google parent Alphabet. Congress has hauled CEOs of Facebook, Twitter, Alphabet and Apple to testify on Capitol Hill with increasing regularity. Just yesterday, members of the Senate Judiciary Committee told Mark Zuckerberg and Jack Dorsey – solo at hearing yesterday — in no uncertain terms that antitrust and other issues will continue to be top of mind.

Apple said that starting Jan 1, the App Store Small Business Program will reduce commission on paid apps and in-app purchases for developers who sell digital goods and services on the store who have earned up to $1 million in proceeds during the previous calendar year. The store’s standard commission rate of 30% will remain in place for apps making more than $1 million in proceeds — defined as a developer’s post-commission earnings.

“Small businesses are the backbone of our global economy and the beating heart of innovation and opportunity in communities around the world. We’re launching this program to help small business owners write the next chapter of creativity and prosperity on the App Store, and to build the kind of quality apps our customers love,” said Apple CEO Tim Cook.

“The App Store has been an engine of economic growth like none other, creating millions of new jobs and a pathway to entrepreneurship accessible to anyone with a great idea,” he added. “Our new program carries that progress forward — helping developers fund their small businesses, take risks on new ideas, expand their teams, and continue to make apps that enrich people’s lives.”

More details will be released in early December. But Apple said that if a participating developer surpasses the $1 million threshold, the standard commission rate will apply for the remainder of the year. If a developer’s business falls below the $1 million threshold in a future calendar year, they can requalify for the 15% commission the year after.

The App Store reaches users of more than 1.5 billion Apple devices around the world in 175 countries and over 40 languages, with more than 180 local payment methods and 45 accepted currencies. In 2019, Apple said, the App Store ecosystem facilitated $519 billion in commerce worldwide — with over 85% of that total accruing to third-party developers and businesses.

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