Business News Digital Top Stories

Apple cuts commission on in-app purchases for small businesses – Spotify and Epic are not impressed

By | Published on Thursday 19 November 2020


Apple yesterday announced it is cutting the commission it charges on in-app purchases from 30% to 15% for small businesses. The move comes as major app operators like Spotify and Fortnite-maker Epic fight what they sometimes dub the ‘Apple tax’ through lobbying and legal efforts. Neither companies will benefit from this discount, which Spotify dubbed “window dressing” and Epic called a “calculated move”.

Companies like Spotify and Epic object less to Apple charging a commission when it processes payments, and more to the fact that when you make an iOS app you are obliged to use Apple’s payment processing platform, and aren’t even allowed to sign-post users to alternative payment options, for example via an app-maker’s own website. Those policies, Spotify and Epic argue, are anti-competitive.

Spotify took its beef with Apple over the App Store policies public in March last year, filing a complaint with the European Commission’s competition regulator and launching a public-facing website setting out its grievances.

Epic ramped up its anti-Apple tax efforts earlier this year by breaking the rules and adding an alternative payment option in the Fortnite iOS app. When Apple then removed said app from its store, Fortnite sued in the US courts and launched a major Apple-dissing publicity campaign seeking to rally support from Fortnite’s userbase.

With the Small Business Program announced by Apple yesterday, companies that make less than $1 million a year from their iOS apps will be charged a 15% commission instead of the 30% commission. The tech giant said the scheme was launching at “an important time as small and independent developers continue working to innovate and thrive during a period of unprecedented global economic challenge”.

Apple boss Tim Cook added: “Small businesses are the backbone of our global economy and the beating heart of innovation and opportunity in communities around the world. We’re launching this programme to help small business owners write the next chapter of creativity and prosperity on the App Store, and to build the kind of quality apps our customers love”.

Not so, reckon Spotify and Epic. They have both hit out at Apple’s announcement, which they see as a cynical bid to divide the app-making community, so to distract attention from what – Spotify and Epic would argue – is Apple’s ongoing and blatant abuse of the monopoly it has over the iOS ecosystem.

“This would be something to celebrate were it not a calculated move by Apple to divide app creators and preserve their monopoly on stores and payments, again breaking the promise of treating all developers equally”, Epic CEO Tim Sweeney told reporters. “By giving special 15% terms to select robber barons like Amazon, and now also to small indies, Apple is hoping to remove enough critics that they can get away with their blockade on competition and 30% tax on most in-app purchases”.

Meanwhile, a spokesperson for Spotify was just as dismissive. “Apple’s anti-competitive behaviour threatens all developers on iOS, and this latest move further demonstrates that their App Store policies are arbitrary and capricious”, they said. “We hope that regulators will ignore Apple’s ‘window dressing’ and act with urgency to protect consumer choice, ensure fair competition, and create a level playing field for all”.

As Apple was announcing its big commission discount for small businesses, Epic was extending its legal assault against the tech giant. Having already sued over the Apple tax in the US, the gaming firm filed new litigation in relation to the dispute in the Australian courts.

Epic argues that Apple’s App Store policies breach Australian consumer rights law. Speaking to the Sydney Morning Herald, Sweeney declared: “Apple has said they have the legal right to do whatever the hell they want because they make the devices. Under Apple’s legal theory they could charge 90%. The very notion that they’re standing on is antithetical to free markets and competition”.