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Apple halves App Store fees


The Apple logo hangs in the glass box entrance to the company's Fifth Avenue store in New York
The Apple logo hangs in the glass box entrance to the company’s Fifth Avenue store in New York

Apple will reduce its App Store fees to 15pc for small businesses earning up to $1m (£774,000), its latest concession as it faces mounting criticism over its cut of earnings. 

The discount, which will come into effect in 2021, is designed to help struggling companies and independent developers grow their apps during the pandemic, Apple said.

However, it comes against a backdrop of lawsuits and protests against the App Store fee which has been described by David Cicilline, the House antitrust committee, as a form of “highway robbery”.

Apple’s CEO Tim Cook defended the App Store, saying: “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.

“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.”

Typically, developers who charge for their apps, or who offer paid upgrades, are required to use Apple’s own payments system, for which the company takes a 30pc “tax”.

Under the new rules, existing developers who make up to $1m in 2020 for all of their apps, as well as developers new to the App Store, will have their App Store fee cut in half. 

The lower fee is expected to apply to the majority of Apple’s 28 million developers who together earned half a trillion dollars from global commerce last year. 

However, it is unlikely to stem the tide of criticism from larger app developers such as Epic Games, the maker of Fortnite, which made around $191m from the App Store between January and August. 

Epic is facing a potentially year-long ban on the App Store after circumventing the tech giant’s payments system in protest of the fee. 

It filed a lawsuit against Apple in the US earlier this year and, on Monday, launched another case in Australia. The company claims Apple’s rules are an unfair exercise of power that hurts developers and forces consumers to pay more.

“Although Epic portrays itself as a modern corporate Robin Hood, in reality it is a multi-billion dollar enterprise that simply wants to pay nothing for the tremendous value it derives from the App Store,” Apple said at the time. 

Other companies have deemed the fee unfair. Tinder and Netflix have stopped offering subscriptions through the App Store, while Spotify, which competes with Apple’s music service, has lobbied regulators to launch monopoly investigations.

In August, Facebook accused Apple of placing a huge burden on small businesses that are trying to bring more of their services online during lockdown. 

In response, Apple agreed to offer a three-month respite of fees for businesses that have been forced to move to online-only events. 

More details of the scheme for small business will be announced in December.

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