Apple announced on Wednesday it’s cutting the commission it takes on App Store in-app purchases, from 30% to 15% from January 1.
The move came following a series of controversies surrounding Apple Store’s policies. There have been criticisms over the tech giant’s 30% commission on in-app purchases, pushing Facebook and other app developers like Epic Games to take Apple to court over its Store policies.
Apple’s price reduction will apply to developers that made up to $1 million in revenue over the past year.
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“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,” Apple’s CEO Tim Cook said in a press statement.
“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.”
Apple said the comprehensive details of the program will be released in early December. But 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.
The changes however, do not affect apps selling goods and services and making over $1 million yearly in proceeds.
Apple has 1.8 million apps in the Apple Store and has been under fire for what many described as oppressive practices.
In August, Facebook had teamed up with Microsoft and others to criticize Apple’s game policies, as it has affected many other game apps launched on the Apple store. Apple kicked video game Fortnite out of its store, following Epic’s, the game’s creator added a feature that allows players to buy virtual currency using their own credit cards, which denies Apple the opportunity to take its 30% cut.
Facebook’s CEO Mark Zuckerberg said Apple is making monopolistic and anti-competitive rules, and it’s becoming harmful to customers.
“Apple has this unique stranglehold as a gatekeeper on what gets on phones. Zuckerberg told more than its 50,000 employees during a Q&A session. He added that California-based company’s app store “Cupertino blocks innovation, blocks competition and allows Apple to charge monopoly rents.”
The anti-competition and monopolistic allegations against Apple attracted antitrust scrutiny in Europe.
In September, developers formed a group called the Coalition for App Fairness in a bid to force Apple to change some of its policies and remove the 30% charge.
Apple has bowed to pressure and bent the rules. While the Wednesday’s announcement may seem like a financial hit for Apple since the new policy will affect 98% of companies that pay a commission to the world’s most valuable company, the New York Times reported, citing data from Sensor Tower, that the combined revenue of the companies totaled only 5% of the revenue generated by App Store last year.
The App Store, which was launched in 2008, has become the safest and most vibrant app marketplace, entertaining half a billion visits by people weekly.