Welcome back to This Week in Apps, the TechCrunch series that recaps the latest OS news, the applications they support and the money that flows through it all.
The app industry is as hot as ever, with a record 204 billion downloads and $120 billion in consumer spending in 2019. People are now spending three hours and 40 minutes per day using apps, rivaling TV. Apps aren’t just a way to pass idle hours — they’re a big business. In 2019, mobile-first companies had a combined $544 billion valuation, 6.5x higher than those without a mobile focus.
Apple reduces App Store commissions to 15% for ‘vast majority’ of developers
The changes apply to developers with less than $1 million in revenue.
Apple this week announced a major shakeup to its App Store commission rate. The company, as of January 1, 2021, will only charge App Store developers 15% on paid apps and in-app purchases if their business has not exceeded $1 million in proceeds during 2020 for all their apps combined. Qualification for the new App Store Small Business Program, as it’s called, will be re-assessed revenues on an annual basis going forward.
The changes arrive at a time when Apple has been under increased regulatory scrutiny over how its App Store operates, which includes antitrust investigations in the U.S. and E.U. It has also waged war with developers throughout the year over in-app purchases, leading the company to revise its already complex rules even further, and spell out how and when it gets to charge its so-called “Apple tax.” And it’s in the middle of a nasty legal battle with Fortnite maker Epic Games, which doesn’t want to be forced to use Apple payments or even, necessarily, the App Store.
The commission changes may help silence some disgruntled voices from the wider app development community, while giving Apple a way to show regulators that it’s enabling fair competition.
However, several of Apple’s largest and harshest critics reacted negatively to the news.
The advocacy group, the Coalition for App Fairness, which includes Epic, Basecamp, Deezer, Match Group, Spotify and many others, said: “developers want a level playing field from Apple, not a symbolic gesture.” They argued that Apple still owns the customer relationship, the threshold of $1M is arbitrary, and they said the majority of developers who “generate livable revenue,” won’t benefit.
Apple, though, had claimed the change would benefit the “vast majority” of the App Store development community. Today its App Store hosts 1.8 million apps that reach more than 1.5 billion Apple devices.
Individual developers we spoke to, including those who would qualify for the program, weren’t complaining. And many were fairly surprised by Apple’s move.
“I think it’s fair to say that this change wouldn’t have happened without either the…
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