August 24, 2020

Are Apple's and Google's 30% app store commissions too high?

Are Apple's and Google's 30% commissions on their app stores too high? What are the alternatives?

Are Apple's and Google's 30% app store commissions too high?

Apple’s been seeing a lot of backlash lately from various app developers over its iOS App Store policies.

For starters, there’s the recent congressional hearings about Apple’s business practices in general, including its App Store policies.

Next is an ongoing squabble with Epic Games, the people behind popular video game Fortnite, that’s taken a very public turn. Basically, Epic added an option to allow users to directly buy from Epic Fortnite’s in-game virtual currency (“V-Bucks”), bypassing Apple’s rules (and 30% commission on digital app purchases). Apple took Fortnite’s app down as a result, leading to Epic suing Apple. (Google also removed Fortnite from Google Play for the same reasons, but this hasn’t received as much attention.)

Epic’s even tried getting users on their side in this dispute between billion dollar tech companies, by making a parody of Apple’s famous “1984” ad (the one that introduced the Macintosh to the world).

Finally, there’s the strangest turn of events, with Apple threatening to remove Automattic’s WordPress app if it didn’t support in-app purchases. The problem? It’s a free app, and one merely meant to allow users to access/manage their WordPress sites from their smartphones. As such, Automattic added in the option to upgrade WordPress.com plans to paid versions, which would trigger Apple’s 30% commission. Backlash set in last week, with Apple finally allowing Automattic to drop this feature from its app.

Apple’s and Google’s 30% commissions are too much?

Some have suggested Apple’s control over the App Store is too strict. Others note most of the above disputes are between wealthy companies, making it hard to side with anyone. However, I feel that some of the above could likely be avoided if Apple (and Google) didn’t have a 30% commission, which is rather large.

Here’s how the modern app store business model and commission rates work:

Infographic
Infographic by Statista (CC BY-ND)

Basically, the 30% commission only applies to electronic purchases, such as ebooks or digital comics. It’s one reason Amazon’s Kindle and Comixology digital comics app don’t allow such purchases through them; instead you have to open a browser and buy comics/ebooks through there first. (Never mind Amazon itself takes a whopping 50% share of creators’ comic sales made on Comixology.)

Meanwhile, subscriptions seem to get more of a break after a year, while physical goods don’t incur Apple’s commission. Checking, I can see Amazon allows me to buy the print version of a book in its app, but directs me to buying the Kindle version with a browser.

Possible solutions

Ultimately, I suspect this is an area where Apple and Google aren’t going to win, given the European Union’s increasing scrutiny on their app store business practices. Even the US is starting to get restless, though I feel a Biden administration might do more about this than Trump will.

Apple and Google reducing their commissions to something more reasonable (say, 5% or 10%) might be the best option. It’d probably cut down on attempts by app developers to get around their commissions, reduce grumbling, and there might be fewer accusations of monopolistic business practices. However, that’d require the tech titans to willingly sacrifice a lucrative revenue source; CNBC estimates Apple made about $46.2 billion in revenue from app store commissions for the 2019 fiscal year.

Another solution would be to allow sideloading or third party app store support on Google and iOS devices. One example’s Amazon’s Appstore for its Fire tablet line; it’s also available on Android devices. While Android allows for such more easily than iOS, supporting such on the latter might raise security or ease of use concerns.

Photo by Karlis Dambrans (Flickr / CC BY)

Tags: TechApp StoreAppleappsFortniteiOSWordPress