We didn’t take commission on 90% of App Store sales and billings • The Register

Comment Apple and Epic Games have made their final arguments in their California lawsuit, but Cupertino is continuing its charm offensive, revealing that the App Store ‘facilitated’ a 24% increase in billings and sales in 2020 to hit a record high of $643 billion.

The data comes from a study [PDF] from the economic consulting firm The Analysis Group commissioned by Apple. Some of his findings addressed points of contention raised during the murderous lawsuit with Epic Games.

For example, Apple was forced to defend its anti-steering provisions, which prohibit software developers from pointing to alternative payment methods beyond the walled garden of the App Store. In practice, this means that app makers cannot mention or reference their own payment gateways, where they can process transactions without providing 30% of their revenue to Apple.

The report noted that 90% of total billings and sales took place beyond the App Store, where Apple would not have been able to take a slice.

Looking at the data, this apparently included sales of physical goods and services, where Apple didn’t charge a commission, and companies (like Amazon, Uber, and Lyft) that developed apps specifically for iOS users are ” authorized” to use their preferred payment gateways.

During the lawsuit, Apple Fellow Phil Schiller distinguished between physical and virtual goods, noting that the company was unable to guarantee delivery of the former.

Physical goods and services accounted for the overwhelming majority ($511 billion) of all “enabled” app total revenue, up 24% from a year earlier. Some $86 billion came from digital goods and services, up 41%, with the rest of chicken feed coming from in-app ad sales, which was $46 billion and 4% up year-over-year .

Apple has attempted to tie these numbers to revenue from small software developers, pointing to its decision to cut its commission rates from 30% to 15% on small-volume developers in November last year, and pointing to a chart detailing nearly three-fold revenue growth for app makers who earn “less than $10 million a year” since 2015.

But again, this could be misleading because no base numbers were given – in fact, the “small developer chart” (fig 1) didn’t include any financial values ​​- and, as Apple noted it Even, the number of small developers has increased by 40 per hundred during these years.

The analyst group then broke down the $643 billion figure by category into general retail, travel, food delivery, and more. As you might expect, general retail sales (like Amazon’s) accounted for the vast majority of physical goods and services revenue, totaling $383 billion.

It is not a surprise. With most physical stores closed around the world and some regions limiting what supermarkets could sell, the only real option was to head online.

The little guys? Not enough

And it’s the big players who have benefited here, as evidenced by Amazon.com’s revenue for 2020, where revenue jumped more than 34% to $215.9 billion. Other big online retailers, like JD and Walmart, also had bumper years.

It’s fair to say that it was most likely retail players with apps on the App Store that took advantage last year.

Likewise, the third largest category, food delivery, is dominated by a handful of large companies, such as Uber and Deliveroo. This is a space where smaller vendors are not able to compete. You need a vast pit of venture capital behind your back, as well as the stomach to withstand consecutive years of losses.

This isn’t the only piece of App Store fluff Apple has released in recent weeks. In May, amid the lawsuit with Epic Games, it released a report claiming it had stopped $1.5 billion in fraudulent or suspicious transactions in 2020.

Apple was repeatedly pressed to justify the 30% cut on its biggest developers and pointed to security and safety measures in the App Store, as well as other technologies, like the Metal graphics API.

In 2020, Congress estimated the cost of running the App Store for Apple to be just $100 million, with annual worldwide revenue of $15 billion. ®

Aurora J. William