- Apple’s new App Store Small Business Program launches on January 1, 2021, and cuts the commission fee for a majority of developers from 30% to 15%.
- In order to qualify for the App Store Small Business Program, a developer needs to make less than $1 million in post-commissions earnings the previous year.
- This move comes as governments scrutinize Apple’s potential monopoly power over apps.
Apple announced a new program this week that will slash the commission fee for a vast majority of app developers in half. As part of the App Store Small Business Program, developers who earn up to $1 million a year on the App Store will pay a 15% commission rather than the standard 30% that they have been paying for years.
Apple says that its App Store Small Business Program will officially launch on January 1, 2021, which means that any developers who earned $1 million or less on the App Store in 2020 will pay 15% in commission next year. Apple notes that entry to the program is based on post-commission earnings, so even if gross revenue is as high as $1.3 million, those developers will still be eligible to take part in the program starting next year.
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Apple says that it will release more detailed guidance about the program early next month, but the criteria for being part of the program are fairly clear. If a developer makes $1 million or less, post-commission, from all of their apps, they will qualify for the program and the reduced commission. If a developer surpasses the $1 million threshold, the commission rate will revert to 30% for the rest of the year. If a developer dips below the $1 million threshold in a year after topping it previously, they can reapply for the program the following year.
Legal scrutiny over Apple’s practices has ramped up significantly in recent months, with developers complaining that Apple requires them to include in-app purchases, which are, of course, subject to Apple’s 30% commission fee. As a result, European Union regulators started investigating Apple earlier this year. The US House of Representatives has been scrutinizing monolithic technology companies like Apple this year as well, and suggested in a recent report that Apple has “gatekeeper power over software distribution on iOS devices.”
“Small businesses are the backbone of our global economy and the beating heart of innovation and opportunity in communities around the world. We’re launching this program to help small business owners write the next chapter of creativity and prosperity on the App Store, and to build the kind of quality apps our customers love,” said Apple’s CEO Tim Cook in a statement on Wednesday morning. “The App Store has been an engine of economic growth like none other, creating millions of new jobs and a pathway to entrepreneurship accessible to anyone with a great idea. Our new program carries that progress forward — helping developers fund their small businesses, take risks on new ideas, expand their teams, and continue to make apps that enrich people’s lives.”