Apple will cut the fee it takes off each App Store transaction in half for smaller developers, with those who made $1 million or less from apps last year to pay a 15% commission on each sale instead of the typical 30%.
Apple announced the news Wednesday and is calling it the App Store Small Business Program. CEO Tim Cook said in a statement the company is launching the program “to help small-business owners write the next chapter of creativity and prosperity on the App Store.” Cook added he thinks the new fee structure will “help developers fund their small businesses, take risks on new ideas, expand their teams, and continue to make apps that enrich people’s lives.”
Apple said in a recent news release that it issued this change because the coronavirus caused app developers to have a particularly tough year — which is true, but not for gaming, and most gaming apps will remain exempt from this reduced fee as they bring in far more than $1 million in revenue each year.
The change to Apple’s fee structure is unlikely to have a huge effect on the company’s bottom line. App analysis outfit Sensor Tower told the New York Times it estimates about 98% of the companies on the app store that pay Apple a commission will be affected by the new fee structure — but those companies all account for less than 5% of total App Store revenues this year.
This deal doesn’t apply to Epic Games, which is still in an ongoing (and slow-moving) legal battle against Apple and its 30% commission structure, which it says is too high for even the top-selling developers on the platform. In May, “Fortnite” passed the $1 billion lifetime revenue threshold driven largely by app store purchases.
Earlier this year Epic tried to bypass Apple’s fees on in-game purchases by encouraging “Fortnite” players to download virtual currency directly from Epic’s marketplace, which prompted Apple to boot “Fortnite” from the store — it hasn’t been on either the Android or App Store marketplaces since mid-August.
After Epic sued Apple for removing “Fortnite” from the App Store, several other popular app developers, including Microsoft and Spotify, created the Coalition for App Fairness to protest Apple’s app tax. Apple’s commission is also being examined as potential anti-competitive behavior in anti-trust lawsuits in both the E.U. and U.S.