Apple cuts App Store rates in half for some but way back for Fortnite

Rates drop to 15% for developers making less than a $1m a year

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After months of litigation, Apple today announced a major change to its App Store developer programme. Instead of the standard 30% fee that it has collected since the App Store launched in 2008, Apple will now collect just 15% for most of the apps and games sold in the store.

The terms of the new programme, which begins on 1 January, are as follows:

• 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 programme 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% commission the year after.
• The existing subscription terms, which lowered the fee from 30% to 15% after the second year of a recurring subscription, remains in place.

It’s not clear how many of the developers who sell apps in the App Store make more than a million dollars, but it’s likely to be a small percentage of the nearly two million apps that are sold in the store.

Apple CEO Tim Cook said the new terms will enable developers to “fund their small businesses, take risks on new ideas, expand their teams, and continue to make apps that enrich people’s lives”. On annual sales of $999,999, for instance, a developer will save nearly $150,000 under the new programme.

While the move is certainly welcome news for iOS developers, it won’t change anything about the fight between Epic and Apple. Epic makes far more than a million dollars a year on the App Store from Fortnite alone, and even if they didn’t, Epic is unlikely to relent in its fight against Apple’s insistence that developers use Apple’s in-app payments to sell anything inside the app. The case is scheduled to resume next summer.

Additionally, Apple is fighting the US Justice Department in an antitrust case over monopolistic and anti-competitive practices pertaining to App Store fees. Today’s move could take some of the teeth out of that argument, but the case is likely to proceed.

IDG News Service

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