Starting next year, Apple will cut its commission charges in half for smaller developers that use the App Store as their platform. Businesses that will be earning less than $1 million per year will pay a 15% commission on in-app purchases, leaving the standard 30% for businesses booming over $1 million per year.
Founder of Epic Games, Tim Sweeney said that the move is in retaliation to current investigations into Apple by the Federal Trade Commission, Congress, European Union, and the Justice Department on antitrust grounds.
Apple slashes standard App Store commission fees amid court battle against Epic Games
The Cupertino tech giant has been involved in an on-going court battle with Epic Games since August. The dispute started when Epic put in a direct payment system in Fortnite, without Apple’s approval to avoid paying the 30% commission on in-app purchases. After seeing this, Apple removed the game from its App Store, which was followed by a civil lawsuit filed by Epic against Apple in the U.S. and now recently in Australia.
Sweeney commented, talking with the Wall Street Journal, over the company’s slash in commission, saying that this is more or less an elaborative ruse to avoid the main point of focus and evade the matter altogether.
Apple is merely hoping to remove enough critics that they can get away with their blockade on competition and 30% tax on most in-app purchases. But consumers will still pay inflated prices marked up by the Apple tax.
As reported by TechCrunch, he then further stated:
It’s everybody’s duty to fight. It’s not just an option that somebody’s lawyers might decide, but it’s actually our duty to fight that. If we had adhered to all of Apple’s terms and, you know, taken their 30% payment processing fees and passed the cost along to our customers, then that would be Epic colluding with Apple to restrain competition on iOS and to inflate prices for consumers.
Tim Sweeney went on to say that Epic’s challenge against Apple was equal to the civil rights fight. This has brought him a lot of backlashes.
So going along with Apple’s agreement is what is wrong. And that’s why Epic mounted a challenge to this, and you know you can hear of any, and [inaudible] to civil rights fights, where there were actual laws on the books, and the laws were wrong. And people disobeyed them, and it was not wrong to disobey them because to go along with them would be collusion to make them status quo.
Sweeney further commented on Apple’s monopolistic practices and not giving developers enough free space and freedom.
This would be something to celebrate were it not a calculated move by Apple to divide app creators and preserve their monoply on stores and payments, again breaking the promose of treating all developers equally
By giving 15 percent terms to selevt robber barrons like Amazon, and now also to small indies, apple is hoping to remove enough critics that they can get away with their blockade on competition and 30 percent tax on most in-app purchases.
Spotify also spoke on this matter and said the App Store rules are ‘arbitrary and capricious’. It also commented on Apple’s recent change in policy and making arguments about Apple not allowing developers to use their own payment method, rather use Apple’s direct payment system.
Apple’s anti-competitive behavior threatens all developers on iOS, and this latest move further demonstrates that their App Store policies are arbitrary and capricious. While we find their fees to be excessive and descriminatory, Apple’s tying of its own payment system to the App Store and the communications restrictions it uses to punish developers who choose not to use it, put apps like Spotify ata a significant desadvantage to theri own competing service. Ensuring that the market remains competitive is a critical task. We hope that regulators will ignore Apple’s ‘window dressing’ and act with urgency to protect consumer choice, ensure fair competition, and create a level playing field for all.
Epic is evolving into a powerful and lucrative platform that is valued at $17.3 billion during August, following a $1.78 billion funding deal. This announcement from Apple lowkey suggests Epic is holding the reigns in this case.
Sweeney noted that Epic pays 2% or 3% in transaction costs in developing countries, another 1% for payments support, and ‘maybe 1%’ of revenue to cover its bandwidth costs, and additionally suggested that an 8% App Store tax might be acceptable in exchange for the service it gives to the developers.