Many large companies make a big stink about Apple’s cut of App Store sales. They’re forced to use the App Store for free on iOS, but Apple charges 30% of sales. Developers with free apps are subsidized by those selling apps, in a way. Apple does also charge $99 per developer, per year, to submit apps to the App Store. This is how Apple makes money to host all of these apps. However, that 30% cut is quite steep for a small developer. Someone who isn’t raking in money hand over fist would struggle with such a wide portion of their paycheck going directly to Apple. While we only hear the complaints of large companies, because they can complain louder, small developers have struggled with Apple’s cut.
This week, Apple announced that they’re slashing that 30% cut for smaller developers.
If a developer makes less than $1 million a year on the App Store, they’ll only have to pay 15% of their sales. This will greatly help smaller developers grow and compete with million or billion dollar companies. It could even help disrupt the entire tech space.
While large companies like Epic were comfortable using indie developers as props for their arguments against Apple’s pricing, now that Apple’s giving indie developers a steep discount, will they drop their lawsuits and return their apps to the App Store?
No, they’ll double down in the worst possible way.
Apple’s New Fee Structure
On January 1st, 2021, Apple will begin taking only 15% of App Store sales from developers making under $1 million per year. Smaller developers have felt as though Apple’s fees were choking them for some time. They couldn’t maintain apps or make enough money off of them to stay in business. Many small indie iOS developers had to make apps on a variety of platforms to cover costs, and they’ve been under-funded and under-staffed as a result. Larger developers have used their platform to claim they wanted to support smaller developers. Now Apple is. Surely this means these larger companies will be okay fronting the larger part of the fees so smaller developers can have a chance to grow, right?
Rich White Man Compares App Store Fees to Civil Rights Movement
Who had “large gaming company CEO makes terrible comments about race in his ‘struggle’ for more money for a billion dollar company” on their bingo card? No one? Yeah, me neither.
“It’s everybody’s duty to fight. It’s not just an option that somebody’s lawyers might decide, but it’s actually our duty to fight that. If we had adhered to all of Apple’s terms and, you know, taken their 30% payment processing fees and passed the cost along to our customers, then that would be Epic colluding with Apple to restrain competition on iOS and to inflate prices for consumers. So going along with Apple’s agreement is what is wrong. And that’s why Epic mounted a challenge to this, and you know you can hear of any, and [inaudible] to civil rights fights, where there were actual laws on the books, and the laws were wrong. And people disobeyed them, and it was not wrong to disobey them because to go along with them would be collusion to make them status quo.”
– Tim Sweeney, CEO of Epic (emphasis mine)
Maybe he misspoke? Some rich white man isn’t going to liken the 15% he has to pay more than indie developers to the fight for basic human rights for people in the United States, right? Let’s give him a chance to walk that back and… oh.
Click to go to the Tweet, if he hasn’t deleted it yet.
Epic certainly just lost its battle. Not only is its argument that Apple’s hurting small businesses gone, but its CEO has displayed just how little they think of even their own users. Remember what Epic’s “gallantly fighting” for here. They want to be able to open a competing game store where they can do exactly what Apple’s doing to other developers who are using their game engine. They want to be able to collect a little more money. The company that is making billions off of people buying virtual currency for their games is complaining about having to pay for hosting. They agreed to a contract and made billions from it, and they’re likening that to the fight for Black civil rights and equality for people of all races, religions, genders, and walks of life.
They had some support for their argument before. But between Apple pulling out the rug and giving indie developers a break and their CEO coming off as a tone deaf rich white boy manchild, Epic has lost. It’s time to throw in the towel, Epic’s only going to further hurt their brand if they don’t get back in Apple’s good graces now.
Apple Compromises, Others to Concede
For some time, Spotify pointed out that Apple allowed only its own services on the HomePod or Apple Watch. However, both platforms are open to third party developers now. Companies have claimed that the 30% fee Apple charged developers was squashing small developers, competition, and innovation. Apple cut those fees in half. Apple’s taking away all the reasons these large companies claim they’re against Apple’s fee, because Apple knows these are their good points. Apple’s winning the culture war, all while continuing to charge large companies their 30%.
With public support growing for Apple, companies throwing fits and comparing an App Store fee to the battle for basic human rights, it’s going to become clear that they have no altruistic considerations. These large, highly successful companies are performing nothing more than an awkward dance around their true intentions: greed. Apple called their bluff. Now companies, especially Epic, are going to have to decide if it’s time to keep fighting—losing business and looking ridiculous in the public eye—or admit they need the App Store too, and return.
Is App Store exclusivity a good thing? Probably not. But by refusing to argue for what they actually want (Epic, for example wants to make their own version of the App Store), these companies have made it easy for Apple to erode their flimsy arguments. Eventually Epic will have to admit that they just want the right to do exactly what Apple’s doing. To that, I say, please, do exactly what Apple’s doing. Please. Make a smartphone, make your own smartphone OS, create an App Store for it. The tech world could use more competition. But if your goal is to only profit off of what others have made, expect to pay them for it.
Sources:
- Apple
- Juli Clover, MacRumors
- Connie Loizos, TechCrunch
- Ben Lovejoy, 9to5Mac
- Ivan Mehta, The Next Web
- Chance Miller, 9to5Mac
- Ash Parrish, Kotaku