Apple will reduce App Store cut to 15% for any developer that earns less than $1M in revenue per year from their apps, starting January 1

Any developer that earns less than $1 million in revenue per year is eligible — On Wednesday, Apple announced a reduction to its longstanding App …

The Verge 2020-11-18 Nick Statt

Context & Ripple Effects

Apple's App Store had held a flat 30% commission on apps and in-app purchases since launch — the only prior trim was on affiliate payouts, when Apple cut affiliate commissions to 2.5% back in 2017. The new tiered rate breaks that uniformity for the first time.

The $1M threshold matters because it is calibrated to keep the full-price 30% band on Apple's biggest revenue generators while conceding ground to the long tail — a structure rivals then copied almost verbatim.

First-order effects

Developers under $1M in annual app revenue get their commission halved to 15% starting January 1, immediately improving margins for small studios while Apple keeps 30% on larger earners like major publishers and game companies.

Second-order effects

Google matched the structure within months, dropping Play Store's cut to 15% on the first $1M per year starting July 1 (explicitly after Apple's move), and Amazon followed with an even lower 20% rate on its Appstore (for sub-$1M developers) — turning Apple's concession into the industry-wide template.

Third-order effects

Once the $1M tier became the norm across app stores, pressure shifted to regulators and big-developer rates: Apple later trimmed its mainland China commission to 25% following discussions with the Chinese regulator, suggesting platform take rates are becoming a negotiated, jurisdiction-by-jurisdiction variable rather than a fixed industry standard.

The trend: Mobile platform commissions are migrating from a universal 30% toward tiered, regulator-influenced take rates that segment small developers from large ones.

Discussion

@jacknicas Jack Nicas on x
Put another way: Apple is keeping its 30% commission on the roughly 2% of companies that generate 95% of its App Store revenues. https://www.nytimes.com/...
@dhh @dhh on x
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://www.theverge.com/...
@dhh @dhh on x
And to frame that cut - $150,000!!! - as some sort of noble charity is really beyond the pale. Yes, it's better than the even more obscene $300,000 it used to cost to process $1m, but that's like saying it's better to have your arm cut off than your hand. Yeah, sure, but?!
@tomwarren Tom Warren on x
Big Apple news. Apple is reducing its App Store cut to 15% for most app developers in January. This is a BIG deal for indie app developers that usually have to pay 30% on app revenues and in-app purchases. Details here: https://www.theverge.com/... https://twitter.com/...
@dhh @dhh on x
Quote from Cook is beyond cynical. Written in that faux-care style so beloved by lobbyists. Apple is making smaller app developers growl before Apple (this program isn't even automatic!), such that the abusive tax on payment processing is lowered from 10x to 5x the market rate. h…
@jeiting Jacob Eiting on x
Siri, show me someone who's opinion on this would have been negative no matter what https://twitter.com/...
@aral Aral Balkan on x
I hope the irony of a two-trillion dollar corporation that doesn't pay its taxes implementing a tiered tax system is not lost on all of you. https://twitter.com/...
@waltmossberg Walt Mossberg on x
@Apple cuts its distribution fee for most app developers in half. The change applies to the vast majority of developers, who have annual revenue under $1 million. It won't likely mollify big players who are battling Apple over the fees, but it's a smart and fair move, IMO. https:…
@markgurman Mark Gurman on x
The caveat here: if you top $1M in a calendar year, you won't be eligible for the 15% for the entire following calendar year, even if you make under $1 million that new year. The 15% is based on your prior year's revenue.
@stroughtonsmith Steve Troughton-Smith on x
Apple reducing its commission to 15% will make a huge difference to small businesses and developers like me, and could have ripple effects across the industry and across other platforms. It's a gesture of goodwill that arguably could have come sooner, this year being what it was
@stroughtonsmith Steve Troughton-Smith on x
Whether this move affects looming antitrust regulation, I doubt it — Apple could just as easily return to 30% tomorrow, or 50%, or 80%, and nothing would be there to stop them. That's why regulators want to regulate
@backlon Dieter Bohn on x
It's quite a thing that Apple chose to make devs apply instead of just making it an across the board cut. I suspect that it's because it would be easy for people to game a $1 mil cap system with multiple accounts, so Apple just wants a more direct relationship
@backlon Dieter Bohn on x
Devs who make less and $1 million per year can apply to get their app store fees reduced to 15%. This is a good move in the right direction, but underneath the feel-good number at the top are lots of provisos. https://www.theverge.com/...
@marypcbuk Mary Branscombe on x
I see Apple has innovatively invented copying the payment scale from the Microsoft Store but in an overly complicated way?
@beirutspring Mustapha Hamoui on x
If I were a developer making $1.8M per year on the app store, I now have a strong incentive to divide my company in two, each of which making $0.9M https://twitter.com/...
@gavincostello Gavin Costello on x
Correct. Apple's charges all appear under a single code on your credit card bill, and it's like trying to break into Fort Knox to find out where to find *all* your charges, clearly itemised, in one place https://twitter.com/...
@surajkrdubey Suraj on x
This is a great move. Hoping @GooglePlay to follow in the footsteps soon. https://twitter.com/...
@dhh @dhh on x
Also, checkout the way Apple is treating journalists, in hope that this hollow move sails through without much critique 👀 https://twitter.com/...
@dhh @dhh on x
What continues to be so perverse about Apple's stance that they're entitled to an exclusive hold on all payment processing via the App Store is they - of course!! - allow transactions on the web without it. Using Safari. On an iPhone. This isn't about security. It's about money.
@bzamayo Benjamin Mayo on x
Absolutely massive change to App Store policy: rate cut to 15% for all developers that make less than $1million per year. https://9to5mac.com/...
@viticci Federico Viticci on x
Huge App Store news: Apple is reducing commissions to 15% for developers who earned less than $1 million in a year. This is called the App Store Small Business Program, and it starts January 1, 2021. We have all the details here: https://www.macstories.net/... https://twitter.com…
@tomwarren Tom Warren on x
lawsuits from Epic Games, pressure from app developers like @dhh, and regulators circling has forced Apple into this. As David points out, it's classic divide and rule from Apple. It also shows that Apple's argument about the rules being the same for everyone is pure bullshit htt…
@dangrabham Dan Grabham on x
This is cool for smaller app devs - Apple is chopping the App Store commission in half from Jan. 30 to 15 percent, includes existing devs. https://www.apple.com/...
@sameer_singh17 Sameer Singh on x
Interesting, but somewhat odd move. Smaller developers are more reliant on the app store than big brand ones who are still paying 30%. Appears largely aimed at regulators. https://twitter.com/...
@derloos Anton Nekhaenko on x
Two questions: 1. If your app makes $1,000,001 in a calendar year, do you get to pay 30% just on the $1 that's above the threshold, or on the entire amount? >>>
@carnage4life Dare Obasanjo on x
Apple is cutting App Store fees to 15% for companies making less than $1M per year. This shows that despite their rhetoric, the Epic lawsuit has them shook. They are a trillion dollar company extracting monopoly rents from locking down their platform. https://www.theverge.com/...
@bzamayo Benjamin Mayo on x
Also curious that the timing of this announcement comes after WWDC and all the summer antitrust hearings. IMO Apple got a lot of bad press from appearing to capitalise on the pandemic by imposing 30% fees on small businesses that went virtual, and that helped motivate this.
@zhugeex Daniel Ahmad on x
It's a good move but it's aimed at small businesses that earn less than $1 million per year from all their apps. In other words, this is great for small developers, but doesn't change anything in the case of Fortnite for example or any other app / game that does well. https://twi…
@bzamayo Benjamin Mayo on x
In the press release, Apple refers to the 30% rate as the “standard commission”. But it's hardly standard these days? I mean most apps don't gross a million, video streaming apps have their own 15% program ... the people paying 30% are mainly In-App Purchase powered games.
@benedictevans Benedict Evans on x
Big concession from Apple on app store commission, but also interestingly tactical: fee goes to 15% for less than $1m/year. Helps small developers and startups, but not Spotify or Epic. And Apple has a strong case on Epic but an unwinnable case on Spotify. https://www.apple.com/.…
@vijayshekhar Vijay Shekhar Sharma on x
This is such a win for small developers ! Great move by @Apple . https://twitter.com/...
@backlon Dieter Bohn on x
Even though I don't think it solves the fundamental issues with the App Store, I still do think it's a step in the right direction and it is unambiguously good to allow smaller devs and businesses to keep more money.
@backlon Dieter Bohn on x
Also as Dr. Evil's flunkies will tell you, one million dollars ain't what it used to be. Split out the cost of a salary or two and the cost of actually running a business and even Apple's reduced 15% still feels like a big slice. That's 150k our of 1m. Better than 300k obviously …
@shiraovide Shira Ovide on x
Never change, Apple. Never change. “Apple said in a statement that it had made the change because 2020 was a difficult year for many small companies.”
@shiraovide Shira Ovide on x
Jack said it better: https://twitter.com/...
@kylebrussell Kyle Russell on x
Power laws! https://twitter.com/...
@dhh @dhh on x
If you're going to read about Apple's new scheme to split the App Store opposition with a nearly cost-free charity program, make sure it's this piece from @jacknicas. It actually includes contextualization of the numbers, the scheme, not just a PR reprint. https://www.nytimes.com…
@jacknicas Jack Nicas on x
New: Facing antitrust scrutiny, Apple cut in half the commission it charges smaller app makers. Starting on Jan. 1, developers with less than $1 million in app sales the previous year will pay Apple 15% instead of 30%. https://www.nytimes.com/...

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