Apple to slash App Store developer fee by half to 15% from Jan 1, 2021

Apple is cutting by half the fees charged to most developers who sell software and services on the App Store, marking the biggest change to the store’s revenue structure since the iPhone maker launched the service in 2008. That wasn’t enough for some developers.

The company is lowering the App Store fee to 15 per cent from 30 per cent for developers who produce as much as $1 million in annual revenue from their apps and those who are new to the store. The change will go into effect Jan. 1 as part of an App Store Small Business Program, Apple said Wednesday. The new structure will apply to the “vast majority” of developers who charge for apps and in-app purchases on Apple’s devices, according to a statement. It won’t affect major apps, such as those from Netflix Inc. and Spotify Technology SA.

The Cupertino, California-based technology giant said it’s making the change to help small developers financially and to provide a way for them to invest in their businesses amid the economic struggles caused by the Covid-19 pandemic.

Apple has faced ongoing scrutiny from government regulators and criticism from developers about the percentage of revenue it takes for App Store purchases. The company also is engaged in a lawsuit with Epic Games Inc., the maker of the video game Fortnite, over its App Store fees and payment rules. Alphabet Inc.’s Google also charges similar fees to developers on its Android app store.

The changes failed to appease one of the more vocal small developers who relies on Apple’s ecosystem. “If you’re a developer making $1m, Apple is STILL asking to be paid $150,000, just to process payments on the monopoly computing platform in the US. That’s obscene!” Basecamp Chief Technology Officer David Heinemeier Hansson wrote on Twitter.

In June, Apple blocked an update to Basecamp’s Hey email app after the developer refused to implement a way to sign up in the app, which would have given Apple up to 30% of its revenue from the App Store. After the developer complained publicly, Apple said the app could stay as long as it followed other app-review guidelines.

Spotify, which competes with the Apple Music streaming service and has complained about the App Store’s fees and rules, called Wednesday’s changes “window dressing” that should be ignored by antitrust regulators.