Apple reduces App Store commission by half for ‘eligible’ small businesses, independent developers

Ease of Doing Business for MSMEs: Weeks after app-based businesses in India and outside stood up against Google’s mandatory 30 per cent commission rate for in-app purchases, Apple on Wednesday stepped up to offer some relief. The company on Wednesday announced a new commission structure wherein small businesses and independent developers who earn up to $1 million per calendar year for all of their apps would be “eligible” for only 15 per cent commission rate – “half of the App Store’s standard commission,” Apple said. The relief is part of the company’s new programme — App Store Small Business Programme for developers who sell digital goods and services on the App Store that has 1.8 million apps and is visited by half a billion people every week, according to Apple.

The new programme and rate would be effective January 1, 2021. “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,” said Tim Cook, CEO, Apple in a statement. The new programme, he added, 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 noted that existing developers, who earned up to $1 million in 2020, and new ones on the App Store will be able to qualify for the programme. However, for developers and small businesses having over $1 million revenue during a given calendar year, the standard commission rate of 30 per cent will apply. Nonetheless, in case their business falls below the $1-million limit “in a future calendar year, they can requalify for the 15 percent commission the year after.” The comprehensive details around the programme will be released by Apple in early December.

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The competitor watchdog Competition Commission of India (CCI) had last week issued a probe against Google for alleged favour to its own payment system Google Pay, the dominance it has in the Android ecosystem that has allegedly led to a high commission rate of 30 per cent apart from the mandatory use of its Play billing system “that restricts the choice available to the app developers,” the order by CCI read. Google, in its Android Developers blog on September 28, had said that “We’ve always required developers who distribute their apps on Play to use Google Play’s billing system if they offer in-app purchases of digital goods, and pay a service fee from a percentage of the purchase,” according to Sameer Samat, Vice President, Product Management. The mandate for 30 per cent per cent commission, which was in existence for quite a few years and enforced a few weeks back, was later deferred to April 2022.