According to new data from analytics firm Sensor Tower, neither Apple nor Google are losing out on earnings by modifying their commission structures on the App Store and Play Store for small developers. According to the research, both the companies’ revenue is expected to decrease by only 5% with their respective programs.
Apple launched the App Store Small Business Program last year after it faced strong criticism for its 30% commission rate by app developers. Under the program, developers who earn less than $1 million annually only have to pay a 15% commission on in-app purchases via the company’s digital marketplace.
Apple and Google lose less than 5% of App Store and Play Store revenue with its modified commission structure
According to the data, if Apple’s program had been in place for all of 2020, it would have missed out on $595 million, or roughly 2.7 percent of the estimated $21.7 billion in App Store fees in 2020. The revenue Apple missed out on may seem like a significant number, but if we take into account its total service earnings in 2020, $595 million pale in comparison to the $21.7 billion it earned from App Store fees.
The report points out that developers behind popular apps will continue to pay the 30% commission to the App Store and this will prevent Apple’s revenue from taking a hit.
“Apple reported $54.76 billion in services revenue in fiscal 2020, or about 19% of its total sales. App Store fees are only one part of Apple’s services business, which includes subscriptions, warranties and other products. An Apple spokesperson didn’t immediately respond for comment on the Sensor Tower report.”
Google also recently announced a price drop for developers. From July 1, Google will collect 15% in Play Store fees from developers earning under $1 million. Similar to Apple, Google will also not lose a significant amount of revenue due to its program. Sensor Tower estimated that if the company’s new program had been available through 2020, Google would have missed out on $587 million, or about 5% of the $11.6 billion in Google Play fees for the year.
Currently, both Apple and Google are facing antitrust scrutiny from regulators in the United States and the European Union. In the U.S., a bill is slated for a vote later in March that could prevent Apple and Google from implementing in-app payment systems, and from demanding a 30% or 15% cut from developers.