Apple has announced that it will be reducing the amount of commission it takes from small companies earning less than US$1 million in annual net sales on its platform as part of its new App Store Small Business Program.
Developers who earn less than the stipulated US$1 million in annual sales from their app will qualify for the program and get to enjoy a reduced App Store cut of 15%, down from Apple’s usual 30% commission fee on all in-app purchases. According to Apple, the program will begin on 1 January 2021.
“Small businesses are the backbone of our global economy and the beating heart of innovation and opportunity in communities around the world,” said Apple CEO Tim Cook in a statement. “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.”
Once developers pass the US$1 million in annual sales per year, they will be billed as per the standard 30% rate, and if they later fall below US$1 million again, the lower commission rates will return.
This olive branch from Apple comes as lawmakers around the world have placed its App Store under increased scrutiny, with a report from the House Judiciary Subcommittee on Antitrust stating that Apple earns “supra-normal profits” from its App Store (via CNBC).
Apple’s App Store offers over 1.8 billion apps, with more than 28 million registered app makers on its platform. But Apple has yet to disclose how many of its registered app makers will qualify for the program. According to analytics company Sensor Tower, an estimated 98% of developers will be eligible for the 15% cut in commission, though these developers only earn up to 5% of the App Store’s total revenue.
Apple will be releasing more information on the application process for the program and other eligibility requirements and deadline in December 2020.