Apple takes tiny bite from app fees

Apple has responded to widespread criticism of its ‘exorbitant’ app fees, slashing the 30 per cent app store commission to 15 per cent, for small businesses.

Apple has unveiled an App Store Small Business Program.

Apple has responded to widespread criticism of its “exorbitant” app fees, slashing the 30 per cent app store commission to 15 per cent, for small businesses.

The tech giant on Wednesday unveiled an App Store Small Business Program, in which developers who earn up to $US1m in proceeds during the previous calendar year qualify for a reduced commission of 15 per cent.

The program will launch on January 1 next year, and comes after mounting regulatory pressure and calls from a growing ­coalition of organisations including Nine, REA Group, Free TV Australia, Facebook, Spotify for Apple to reduce its fees.

The company currently takes a 30 per cent cut of all in-app transactions, including music streaming subscriptions, newspaper subscriptions and hotel bookings, for example.

Apple facilitated half a trillion US dollars in sales through its App Stores last year alone, and is the world’s biggest company by market capitalisation.

As The Australian reported on Wednesday, Fortnite maker Epic Games has launched proceedings in the Federal Court of Australia over Apple’s 30 per cent app store fee and alleging the tech giant’s app store breaches both Australian Consumer Law and the Competition and Consumer Act.

The ACCC is currently investigating multiple issues including the use and sharing of data by apps, the extent of competition between Google and Apple’s app stores, and whether more pricing transparency is needed in Australia’s mobile apps market.

An Apple spokesman said the company was launching this program now to help small and independent developers to survive during the COVID-19 pandemic.

The spokesman said the App Store has helped fund over 28 million developers over 12 years grow their businesses.

“Small businesses are the backbone of our global economy and the beating heart of innovation and opportunity in communities around the world. 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,” Apple CEO Tim Cook said in a statement.

“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. Our new program 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.”

Submissions to the ACCC’s pending app stores report, seen by The Australian, show a growing number of local groups opposed to the 30 per cent fee.

Nine said in its submission that it does not offer subscriptions to Stan through its iOS app because Apple’s 30 per cent fee “significantly undermines the commercial benefit derived by Nine”.

“Due to the market power imbalance, competitive terms are virtually impossible to obtain on the App Store or Play Store due to an apparent reluctance of Google and Apple to engage in negotiations,” it said.

REA Group said the 30 per cent fee charged by the app marketplaces was not proportionate to the effort or service provided by the app marketplaces.

The ACCC is to report to government by May 2021.