Apple to halve App Store rates for small businesses

Apple will halve the rates that small businesses have to pay to use its App Store, as it faces growing unrest over the size of its cut.

The iPhone maker said it would charge app developers 15 per cent commission, instead of 30 per cent, if they earned less than $1m in 2020.

Developers whose earnings later exceed $1m will be charged at the standard commission rate for the remainder of the year, but could requalify in future years if their revenue dropped below the threshold again, the company said.

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

“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.”

But the move is unlikely to calm complaints from big developers, which are responsible for the majority of Apple’s App Store revenues.

In August, Epic Games, the maker of Fortnite, launched a legal challenge after its attempts to circumvent Apple’s commission led to Fortnite being removed from the App Store.

In September, Apple responded by dropping App Store fees until the end of the year for businesses that have been forced to pivot to online-only events by the pandemic.

It also made changes to parts of its website to counter accusations that its fees were akin to“highway robbery”, as stated by House antitrust chairman David Cicilline earlier in the year.

As well as complaints from developers, Apple is also facing an antitrust investigation into the App Store by the European Commission following complaints by Spotify and e-reader company Kobo, in addition to a probe into its Apple Pay payment system.

Epic Games and Spotify were among the founders of the Coalition for App Fairness in September, an advocacy group pushing for changes to what they labelled the “app tax”.

Apple warned investors for the first time of a financial risk from regulatory pressure on the App Store in October. In its annual report, the company said that a reduction of the commission could cause its financial condition to be “materially adversely affected”.

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