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Developers wants Apple’s to cut down its Commission Rate on paid-apps and in-app purchases for App Store

by Felix Omondi
apple app store

Apple, one of the most valuable companies in the world could lose up to $16 billion if developers get their way. This news comes from shocking revelations from the Macquarie Research notes, which as reported by Business Insider, the developer community are opposing the App Store commission rate levied by Apple on all paid app and in-app purchases.

There are also reports of industry regulators who have intervened and are accusing Apple of practicing monopolistic behavior within the iOS app market. Experts now argue that developers combined with regulatory intervention may arm-twist Apple into reducing the App Store Commissions.

As things currently stand, Apple takes 30% on all paid apps and in-app purchases for apps and games published on the App Store for their first-year subscriptions. On their second year onwards, Apple reduces the in-app subscription to 15%.

We believe that the traditional… commission rates for app distribution may come under pressure,” said Ben Schachter in the notes.

Changes in the commission rates would meaningfully impact profits. Apple […] could take a $16 billion hit to its adjusted earning if it’s forced to make a significant cut to its App Store commission rates.”

Search engine giant, Google, has also not been spared. It is reported that game developers have also registered their opposition to the commissions the company charges them for publishing the developments on Play Store.

Take, for instance, Epic Games, which has cut ties with Google’s Play Store when they launched the highly anticipated Fortnite for Android. Though the game is officially available on Apple’s App Store and is performing quite well.

You might want to note that Apple is already facing an antitrust lawsuit with regards to its monopolistic position in the iOS market. In addition to the revelation in the Macquarie Research notes, it is safe to say Apple should hold on tight as more legal challenges are up ahead on its road.

Schachter estimates that by 2020, Apple will get about $20 billion in revenue from the App Store unless the developers and regulatory intervention do something to stop that.

Should the move to force Apple to cut its commission rate down to 15%, the revenue it will get from the App Store will stand at $11.2 billion.


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