Tech

Amazon notices Apple, Google cutting app store commission rates, follows suit

Amazon this week said it would reduce its Appstore commission rate for less successful developers, following recent similar moves by Apple and Google, and is sweetening its deal by offering AWS credits to support apps’ backend services.

“Starting in Q4, for developers that earned less than $1m in revenue in the previous calendar year, we are increasing developer revenue share and adding AWS credit options,” said Palanidaran Chidambaram, director of the Amazon Appstore, in a blog post. “This brings total program benefits up to an equivalent of 90 percent of revenue.”

Amazon will allow developers to retain 80 per cent of app revenue, keeping 20 per cent for itself. The company suggests those using AWS credits will add another 10 per cent to the developer take. It’s calling its largesse the Amazon Appstore Small Business Accelerator Program.

The Amazon Appstore supports the company’s Android fork, FireOS, which powers its Fire tablets and TV devices, as well as its Echo smart speakers. It also distributes Android apps and can be installed on Android phones as an alternative to Google Play.

Google in March this year said it plans to halve its 30 per cent Google Play commission for devs earning less than $1m annually, starting in July.

Apple in November last year dropped its standard 30 per cent App Store commission to 15 per cent for the under-$1m set, an initiative CEO Tim Cook characterized as an effort “to help small business owners” – presumably not the same small business owners Facebook has accused Apple of hurting with its wanton privacy controls.

Fittingly, the overall financial impact of these qualified commission reductions is likely to be small. App analytics biz Sensor Tower last year noted that iOS app makers earning less than $1m annually, a group that includes 97.5 per cent of all app publishers, accounted for only 4.8 per cent of the Apple App Store’s $59.3bn revenue from January through October in 2020. Among Google Play devs, 99 per cent earn less than $1m annually.

Amazon’s fit of targeted generosity comes just a week after US House lawmakers proposed a slate of five bills aimed at Amazon, Apple, Facebook, and Google. The bills aspire to curtail platform monopolies, prohibit self-preferencing, prevent anti-competitive mergers, lower barriers to switching services, and update antitrust laws, though there’s ongoing debate about whether these suggested statutes are worded in a way that will actually advance their stated goals.

Critics of current app store commission structures, like Epic Game CEO Tim Sweeney, have dismissed rate reductions as public relations ploys. Epic, seeking the freedom to use a payment system other than Apple’s own in-app scheme, sued Apple last year in an effort to escape the company’s rules. With the trial now concluded, Epic, Apple, and millions of developers await the ruling of the judge.

The Coalition for App Fairness, a group of more than 50 firms including Epic, argues Apple’s transaction fee, at 30 per cent or 15 per cent, is excessive compared to average 3 per cent charged by credit card payment processors. And that sentiment has spread across the pond.

In a complaint [PDF] against Apple’s commission structure filed with the UK’s Competition Appeal Tribunal last month, King’s College lecturer Dr Rachel Kent claims that a US Congressional inquiry estimated that Apple made $15bn in global annual revenue for its App Store, at an operating cost of only $100m.

“Apple achieves this by slapping unjustified charges on its users,” said Kent. “It would not be able to impose these exorbitant charges if competitor platforms and payment systems were allowed to compete on its devices.”

Amazon’s Appstore (~686,000 apps), lags behind the Apple App Store (1.75 million apps) and Google Play (~3.4 million apps) in terms of app quantity, but the company’s decision to extend an olive branch to developers is no less significant as a bellwether of the competitive, regulatory, and legal pressure buffeting the top US tech platforms. ®

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