- Apple warns investors about reducing the App Store fees
- The company says it could affect the finances
- The company is in no mood to reduce the commission fees.
Apple warns the investors regarding the App Store fees. The company says that it would affect the revenue. At present some investors are pushing the company to reduce or remove the App Store commission. The company is alerting its investors about it.
This potential move will hamper the financial results. In other words, the change companies want to see can make the finances unstable. It can cause the company to bear a loss. At present, the company charges a 30 percent standard commission on in-app purchases. These are valid for digital goods.
The sales of physical products are exempt.
Why the 30% commission?
App Store allows businesses to flourish by giving them access to a huge, global audience. In order to earn a profit, they take a cut from revenue from many other companies that use their space. The App Store is where an enormous number of businesses operate.
Subscription commission falls to 15 percent after one year. The Apps are first tested in stages and then approved for the App Store. On the other hand, some developers roll out the Apps on Android. If they became popular, then they put them up on the App Store with a price tag.
The warning was sent to Apple investors in a regulatory filing this Friday. The App Store was introduced in the year 2008. Apple charges developers a 30% fee for each sale made within its online store. This includes apps and in-app purchases.
In recent years, Developers have been frequently asking to reduce the fees. They consider it quite expensive. However, the company has allowed recurring subscriptions to pay only 15% commission after one year. Yet, most sales through the App Store sales system pay the 30% fee.
Apple refuses to reduce fee
Apple told its investors that any reduction to this fee can impact their earnings. This can significantly impact the company’s financial results. “The company retains commission on such sales. If it is reduced or otherwise narrowed or eliminated the financial conditions could be adversely affected”.
Yesterday the company announced the fourth fiscal quarter 2020 results. It achieved $64.7 billion and $12.67 billion in profit. The service category recorded $14.55 billion of revenue versus $12.5 billion in the same period last year. These also include App Store earnings.
Few months ago, Fortnite was banned from the App Store. This happened after Epic Games released a new update that bypasses Apple’s in-app purchases to evade a 30% commission. Epic is now suing Apple. It says the company acts as a monopoly by forcing developers to pay fees.
Apple is also facing antitrust issues from the U.S. House Judiciary Committee. Clearly, the company has no plans to reduce the App Store commission for developers.