Apple to cut App Store fees amid antitrust allegations

Apple to cut App Store fees amid antitrust allegations
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Tech giant Apple has announced that it will reduce the fees it charges app developers on the App Store amid mounting antitrust issues.

According to Apple, it will lower its App Store fees from 30% to 15% for app developers that earned less than $1 million in the previous year. The fees reduction for the smaller developers will take effect on January 1, 2021.

The firm noted that those making more than $1 million annually will continue to be charged 30% based on its existing fee structure.

Small app developers to benefit from the change

In its announcement, Apple said the change in App Store fees will benefit “the vast majority of developers” on the platform although it did not specify how many small app developers will be affected by the adjustment.

Data from app metrics firm Sensor Tower indicated that over 97% of iOS app publishers earn less than $1 million a year in app-based consumer spending and that these firms’ economic activity account for around 5% of the iOS App Store’s total revenues in 2019.

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Antitrust issues thrown against Apple

Apple’s App Store fees have been at the center of scrutiny and controversy in recent months as lawmakers and regulators focus on the the company’s dominance over iOS.

In the US, several members of the House Judiciary Committee discovered a landmark report that Apple, along with other tech firms Amazon, Facebook and Google, hold “monopoly power” and used it in anti-competitive ways.

In June, formal antitrust investigations were announced by EU regulators into Apple’s App Store and Apple Pay system, following complaints by Spotify and Rakuten.

The first investigation delves into the streaming companies’ claim that Apple is violating EU competition rules by requiring the use of its in-app purchase system to access music and books.

They added that Apple is also preventing apps from informing users about cheaper alternatives to purchase these content outside the App Store

According to EU officials, they are concerned that Apple’s practices may harm consumers by preventing them from benefiting from greater choice and lower prices. They conducted a preliminary probe and found that the competitors have passed on its fees to customers by raising prices, or disabled the in-app purchase systems entirely.

The second probe focuses on the impact of Apple’s conduct on competition in mobile payments via its Apple Pay system.

According to the European Commission, it was concerned that Apple Pay’s terms and conditions for buying goods and services on apps and websites on Apple devices “may distort competition and reduce choice and innovation.”

The commission also said that Apple may be limiting access to its “tap and go” functionality on iPhones for payments in stores, and may be denying competitors access to Apple Pay.

In August, Epic Games filed a legal complaint after Apple decided to ban Fortnite from its App Store, preventing users from installing the globally popular game.

The ban was imposed following a game update that allowed players to purchase in-game currency at a lower rate if they bought directly from Epic, effectively bypassing Apple.

The game developer alleged Apple of effectively running a monopoly in both deciding what apps can appear on iPhones and demanding that its own payment system, with the relatively high 30% cut, be used.

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