It was clear that the time would come when Apple would have to find its own means to solve its application container predicament. The question that was in the air was whether his initial offer would be sufficient.
The company announced on Wednesday that it will significantly reduce the commission it charges the smallest applications in its App Store. For developers who make annual revenue of up to a million dollars through the store, Apple’s bite will be 15%, instead of the 30% they paid since the App Store opened in 2008.
Apple has not provided details of the financial impact of the decision. The measure will be effective on January 1, when the company’s current first fiscal quarter ends. In any case, the firm has not published its forecast for the usual next quarter, due to the uncertainty caused by the coronavirus pandemic. The company has already adjusted its fee structure before, especially in 2016, when it reduced its fee to 15% for subscriptions that were renewed after their first year.
But the App Store is an important business segment for the company, and it has been the biggest growth driver for its service revenue over the past two fiscal years, according to Apple financial reports. Analysts estimate that the app store generated $ 17.8 billion in revenue from Apple in the first fiscal year, which ended on September 26. And that will exceed $ 20 billion this year, according to Visible Alpha. That would represent about a third of the turnover of that division of the company in those periods. The impact on results is even greater: Apple’s service revenue reached a gross margin 35 percentage points higher than product side in the last exercise.
However, investors do not appear to be concerned. Apple’s share price fell slightly Wednesday morning – in line with the general weakness of big tech stocks. Large apps and developers are believed to account for the bulk of App Store revenue, so Apple’s decision will not affect your contribution.
Michael Mcloughlin Graphics: María Zuil
That could be the downside. Big developers have complained the most about Apple’s market power, leading to the company’s antitrust scrutiny on both sides of the Atlantic. Epic Games CEO Tim Sweeney, whose company has sued Apple for its fees in the App Store, defines the action as “a move calculated by Apple to divide app developers,” adding that consumers “will continue to pay. exaggerated prices increased by the Apple tax. ”
Apple may have to keep some of its top contributors happy if you want to quell the revolt.