Apple mocks its App Store commission structure with publication of new study – TechCrunch

Today, Apple is addressing the press again to fight allegations of anti-competitive practices on its App Store. Last month, the company detailed the results of a commissioned study that showed Apple was not seeing revenue cuts on the majority of App Store transactions – $ 519 billion in commerce. This time around, Apple is touting the results of a new study designed to show how Apple’s App Store commission rate is similar to that of other app stores and digital content markets.

The new study also comes from the Analysis Group, the same group of analysts Apple used for its most recent study. The fact that Apple has tasked the company with issuing a series of reports to argue its case via market data indicates how seriously Apple takes antitrust allegations.

Today, Apple faces antitrust investigations in the US and the EU. Regulators are not just looking at Apple, but also other leading tech companies, including Google, Amazon and Facebook, to determine whether they have used their size and power to limit competition. Apple CEO Tim Cook is actually expected to testify before the House Antitrust Judicial Subcommittee on Monday, July 27, making the study’s release even more timely, not to mention an obvious attempt to change the narrative. in favor of Apple.

The case against the App Store is complicated.

The argument for anti-competitive behavior stems from a number of factors: that Apple requires developers to process payments through its payment system, which allows it to reduce the number of transactions, instead. authorize the use of third-party payment processors; that Apple competes with third-party developers on the same platform while profiting from the businesses of its competitors; that Apple does not allow developers to other means of distribution on its iOS platform than registration in the App Store, which limits the publication of all kinds of applications; that Apple give its own proprietary applications deeper and more granular access to the controls and functionality of its operating system; and finally, that the cost of doing business on the App Store – typically, a 70/30 split between Apple and developers – is just too high for the services provided, and it is not universally applied.

This last point is the one Apple wants to delve into today.

The new study details Apple’s App Store commission rate and compares it with other two-sided markets. On the iOS App Store, Apple’s commission rate is 30% for paid apps, in-app purchases of digital content and services, and the first year for in-app subscriptions. It drops to 15% after the first year for subscriptions.

This study highlights that most app stores and video game marketplaces have the same commission structure as Apple’s (30%). This includes the Google Play Store, the Amazon Appstore, the Samsung Galaxy Store, the Microsoft Store, as well as the game marketplaces on the Xbox, PlayStation, Nintendo and Steam platforms (Steam is 30% for sales under 10 million. of dollars). Some stores lower the commission rate by 30% in specific cases – for example, Steam lower it for higher sales; Amazon charges 20% commission on video streaming subscriptions; Xbox charges 15% for non-game subscriptions, and so on.

Image credits: Analysis group

Epic Games, the makers of Fortnite and one of the biggest companies opposing the current model of the App Store, however, are charging 12%. The company also notably said it believes that a lower commission can help spur developer innovation and increase competition.

Image credits: Analysis group

The new study further details commission rates for a wide range of platforms other than app and game stores, including digital content platforms, e-commerce marketplaces, and even physical retailers. .

Among digital content platforms, the study looks at companies like Roku, YouTube, Amazon Prime Video Direct, Spotify’s Anchor, Nook, Audible, Patreon and others, many of whom are at 30% or more. He points out that ecommerce marketplaces will sometimes exceed the 30% commission rate. This part of the study tracked commissions on 17 major digital marketplaces, including Amazon, eBay, Etsy, Walmart, Poshmark, Airbnb, Uber, Lyft, Stubhub, Ticketmaster, TaskRabbit, and others.

The study even notes that developers can make more money from digital distribution than from brick and mortar, which is really an odd point of comparison.

The report is handy in terms of centralizing all of that commission data for easy reference in one place, as often companies hide their commission structure deep in their help documentation, if they publicly publish it. But it’s also, generally speaking, common knowledge – and completely misses the point. Antitrust issues surrounding Apple’s app store don’t concern if Apple charges Following than other digital markets. The question is whether this commission structure hinders competition, given Apple’s size, wealth and power.

Apple could have anticipated this whole problem by simply lowering its commission rate and expanding its existing exclusion for what it calls “reading apps” – those that allow users to access previously purchased content or subscriptions. Today’s reading applications include magazines, newspapers, books, audio, music, video, access to business databases, VoIP, cloud storage and other services. approved as classroom management applications. This is, for example, how streaming services like Netflix are allowed to distribute an app that offers no registration, only a connection.

But instead, Apple is doubling down. The fact that the company is fighting for its 30% commission, openly claiming that the commission is both commonplace and fair, is an indication of the growing importance of Apple’s service business to its bottom line.

This business is led by its Digital Content and Services segment, which includes the App Store. In the second quarter of 2020, Apple’s service revenue reached a record high of $ 13.35 billion, compared to $ 11.45 billion in the same quarter last year. Each quarter, services become more and more essential to Apple’s overall growth as a business, especially as the smartphone market itself becomes more saturated and new economic pressures, such as the pandemic, hamper iPhone sales.


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Romona L. Lopez

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