App Store Fee Cut Attracts Criticism From Major Developers Like Spotify and Epic

[MacRumors]

A number of industry players, including Spotify, Epic Games CEO Tim Sweeney, and Basecamp CTO David Heinemeier Hansson, have today criticized Apple's move to launch a new App Store Small Business Program that will halve App Store fees for small business owners and independent developers (via The Verge).

After Apple announced the new program, Spotify released a statement saying that it proved the App Store policies are "arbitrary and capricious."

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 discriminatory, 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 at a significant disadvantage to their 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.

Spotify has repeatedly sparred with Apple in recent years, accusing the company of anti-competitive behavior. The accusations peaked with Spotify's formal complaint to the European regulators that Apple used the App Store to deliberately disadvantage other app developers, which lead to an EU Commission antitrust investigation.

Epic Games CEO Tim Sweeney also released a statement, arguing that Apple is "gerrymandering the community with a patchwork of special deals" by setting up the Small Business Program.

This would be something to celebrate were it not a calculated move by Apple to divide app creators and preserve their monopoly on stores and payments, again breaking the promise of treating all developers equally. By giving special 15 percent terms to select robber barons 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. But consumers will still pay inflated prices marked up by the Apple tax.

Apple and Epic have been embroiled in a legal battle since August, when Apple removed Fortnite from the ‌App Store‌ after ‌Epic Games‌ introduced a direct payment option in the app, defying the ‌App Store‌ rules. ‌Epic Games‌ promptly filed a lawsuit against Apple, accusing the company of anti-competitive actions.

Basecamp CTO David Heinemeier Hansson, who is also responsible for the "Hey" email app which Apple threatened to remove from the App Store in June for breaching its rules, shared a large number of tweets criticising Apple's decision to launch the program, saying that "Machiavelli would be so proud of Apple. Trying to split the App Store opposition with conditional charity concessions, they – a $2T conglomerate – get to paint any developer making more than $1m as greedy, always wanting more. As clever as its sick."

https://twitter.com/i/web/status/1329026886505291776

Hansson also said that the "only good thing" about "this cynical, Machiavellian ploy to split developers" is that "it shows they're sweating. Even if just a little."

https://twitter.com/i/web/status/1329027596667990017

In September, Spotify, Epic Games, and Basecamp joined forces to form the "Coalition for App Fairness," which aims to highlight developer issues with Apple. The organization set out a number of demands, including the assertions that "no developer should be required to use an app store exclusively," "every developer should always have access to app stores," and "no developer should be required to pay unfair, unreasonable or discriminatory fees or revenue shares."

While Spotify, Epic Games, and Hey have each taken issue with Apple's App Store policies in the past, research by app analytics firm Sensor Tower does highlight an interesting observation about Apple's Small Business Program. The research, cited by The New York Times, states that the App Store fee change "will affect roughly 98 percent of the companies that pay Apple a commission... But those developers accounted for less than 5 percent of App Store revenues last year..." This means that Apple is retaining its 30 percent commission on the two percent of companies that generate 95 percent of its App Store revenue.

Apple says that it expects the ‌App Store‌ Small Business Program to generate more digital commerce, support new jobs, and provide more funds for small businesses to invest back into their apps as they work to create software for Apple's users.

Article Link: App Store Fee Cut Attracts Criticism From Major Developers Like Spotify and Epic

 

[Runs For Fun]

How did I know Spotify would be whining about this?

 

[bhlc]

"arbitrary and capricious."

Pretty sure this is entirely up to Apple and they can be as arbitrary and capricious as they want. This isn't the f****** Census.

 

[Mr. Awesome]

Well, of course they’re going to complain. That’s what they do.

 

[archer75]

blah blah blah. Every online store and physical store charges a 30% fee. Quit your whining.

 

[DoogH]

Pretty sure this is entirely up to Apple and they can be as arbitrary and capricious as they want. This isn't the f****** Census.

Actually, they cannot. Anti-trust laws are a real thing.

 

[Cosmosent]

This Small Business App Dev is in favor of Apple's announcement today !

In fact, I must have made the exact same proposal to Tim Cook at least a dozen times OR more over the past 3 OR so years !

I welcome the change, & believe 99% of App Devs will benefit !

What's needed next is One Day Per Week, perhaps every Wednesday, where ONLY Small Business Dev Apps are presented in the App Store !

All other apps are NOT presented on that day !

App Discovery, OR the lack thereof, is still the single-BIGGEST challenge for most Small Business App Devs !

 

[hansmoleman]

What's that old saying... "Let no good deed go unpunished"? $150k for advertising, distribution, instant access to a gigantic customer base and payment processing on $1m in sales is a damn bargain, no matter how you slice it.

Apple could be standing on a street corner handing out $100 bills and these people would complain.

 

[gridlocked]

So the rate just doubles at $1 million or does all revenue under $1 million remain at 15% while over $1 million goes to 30%? If not small devs would take a hit if they go over $1 million by a little bit and never get much bigger. You'd think a phase in to 30% would be the way to go as opposed to a 2x jump at a defined level.

This is not a criticism just an observation. Apple is simply giving a boost to small devs and that is certainly welcome.

 

[Ds6778]

LOL Someone called this earlier today. Poor ole' Spotify, always complaining, paying the artist nothing, taking ages to implement new features, an as always, an ugly app. *plays tiny violin*

I legitimately don't understand the argument for "another way" to get apps on the iPhone. I see people trying to separate the iPhone from the App store but isn't most of the iPhones success due to how it handles the App Store?

 

[Mr. Awesome]

If Apple repealed this change immediately, they would say that the 15% fee was so much better for small developers and ask why Apple would undo this change.

 

[dannyyankou]

Get out of here Epic. You never cared about the small developer. You only cared about your own profits.

 

[retta283]

Epic never cared about the little guys anyway.

 

[itsmeaustend]

Cry me a river. I feel no sympathy for multi-national corporations.

however, I can totally get behind a fee cut for small businesses.

 

[DemNoir]

We had one day of good vibes about something thats actually important to peoples computing needs now once again this boring crap is going to dominate every blog/podcast. The endless struggle of Billionaire Vs Billionaire

 

[lysingur]

I believe this is why Socrates hated democracy. Thankfully App Store isn't a democracy.

 

[Forti]

Well... they could offer 15% for 0-1mln and 30% for everything above that - and spotify / epic would still be mad
they could also offer 10% for everyone and spotify / epic would still be mad...

In my opinion (as a dev) 30% is waay too much, and if you go above 1mln in 2020 you will have to pay 30% from 0 in 2021 <-- this is just stupid.

also - 15% from 0-1mln and 30% above would be way more fair.

 

[eulslix]

Ok that's just getting ridiculous. Before that, I kind of got Epics point, that small developers get squeezed out of their critical profit margins. But now that EXACTLY that point has been addressed, they're still complaining? Shows where the real priorities are...

 

[I7guy]

Seems like the mantra "damned if they do and damned if they don't" applies here.

 

[BigMovieGeek]

This seems like a leg up program for those starting out more than a way to split the developer community. I really see no issue.

 

[justiny]

But I thought they were fighting for the little guy?

/s

 

[cmaier]

Actually, they cannot. Anti-trust laws are a real thing.

Ok, so exactly what anti-trust law would they be violating? Please cite the statute.

 

[jz0309]

But if course they do... greedy they are... and of course they only sue to protect the small ones...

 

[Dolmio]

I’m a bit confused , do they want Apple to provide a platform for free? If they sold physical music records then would they expect HMV or another record store to give them shop space for free too? I mean 30% is probably too high given that overheads are much lower than a physical store but 15% seems fair to me ok the big boys earning over 1mil still pay 30% but it’s still a step in the right direction for the majority

 

[atmenterprises]

We should employ a similar income tax structure in America. 15% flat tax for everyone making less than $1M and 30% flat tax for everyone over $1M.