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Covid 19: Apple cuts App Developers Commission

Apple says small businesses and independent developers are mostly impacted by the cut back

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IT News Nigeria:

Apple, US phone maker, announced recently that beginning 2021 it would cut the application commission fees charged by developers in the small and medium enterprises globally.

According to Reuters, starting from January 1, 2021, for the 30% commission fee charged to application developers, Apple’s charge for small and medium-sized enterprises will be reduced to 15%. This decision is aimed at companies with total application sales of less than $1 million in 2020. App makers with sales of more than $1 million still have to pay a 30% commission to Apple. More details on the reduction in commission fees will be announced next month.

The new charging regulations will benefit the majority of developers who sell digital goods and services in app stores and help reduce the selling prices of their apps. The App Association, sponsored by Apple, said in a statement that reducing commissions for small businesses will give them more resources to scale up and innovate products and services.

IT News Nigeria gathered that before now, Apple’s app store’s fees and regulations have been criticized by many companies, including technology companies Microsoft, music streaming service company Spotify Technology, online dating site Match Group, game developer Epic Games and other big companies, as well as startups and small company. 

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These companies allege that Apple’s fees deprive consumers of choice and push up the price of apps. The outside world believes that Apple’s reduction of commission fees this time is a manifestation of hope for peace under antitrust pressure. Earlier, the US House of Representatives Antitrust Committee stated that Apple had “excess profits” from the App Store.

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In 2011, in the third year of launching the app store, Apple announced that the app store would launch a subscription function for magazines and audiovisual content and charge a 30% commission fee. In 2017, Apple required that the purchase of virtual goods and services in the App Store must pay 30% of taxes to Apple. 

According to data from the US Consumer News and Business Channel, the app store’s annual “Apple Tax” revenue is as high as $15 billion. Statistics show that this move by Apple can reduce the burden on about 28 million development companies.

But the analysis believes that reducing the commission fee may not have much impact on Apple’s revenue. According to the estimates of SensorTower, a research organization, small developers who meet the downgrade criteria only contribute about 5% of Apple’s app store revenue.

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According to Reuters, Moody’s analyst Raj Joshi predicts that reducing commission fees will reduce Apple’s annual revenue by less than 1%, while also allowing Apple to gain more favors from app developers and regulators. Josh said: “This move will to a certain extent alleviate the risks brought by the increasingly stringent review of Apple’s app store pricing and business model by global regulators.”

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