Engaged in a battle over video game commissions, Apple yesterday announced that on January 1, it will start a new developer program for small businesses. Apple currently charges a 30% commission on paid apps and for sales made within apps running on iOS on iPhones and iPads. The new program will now charge a 15% commission up to $1 million. At the same time, Epic Games, the maker of Fortnite, is taking Apple to the Australian federal court over its practice of taking a share of up to 30% of revenue from apps after it was banned for using direct billing instead.
Apps have taken on new importance as businesses adapt to a virtual world during the pandemic. Many small businesses have grown their digital presence in order to continue to reach their customers and communities, according to Apple.
“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. 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”
Tim Cook, CEO
The essentials of the program’s participation criteria:
- Existing developers who made up to $1 million in 2020 for all of their apps, as well as developers new to the App Store, can qualify for the program and the reduced commission.
- 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 percent commission the year after.
Apple said that developers of all sizes have built successful businesses while benefitting from the App Store’s global reach encompassing users of the
1.5 billion | Apple devices (global)
175 | Countries where devices can be found
40 | Languages
180 | Local payment methods
45 | Accepted currencies
$519 billion | (2019) | App Store ecosystem facilitated in commerce worldwide — with over 85 percent of that total accruing solely to third-party developers and businesses of all sizes.