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  • Writer's pictureedbaig

Are Apple's 30% App Store commissions fair? New study says they are

Updated: Jul 23, 2020

Many developers openly complain about the 30% cut Apple takes on digital purchases and subscriptions made through the company's App Store.

Microsoft has balked. The European Union has launched an antitrust investigation. And as the Wall Street Journal recently reported, some developers are coming up with workarounds to avoid the fees or are passing on higher charges to consumers.

But is Apple’s 30% commission actually fair?

Apple insists they are.

Ahead of CEO Tim Cook’s testimony before the U.S. House Judiciary Committee's own probe into antitrust allegations next week, Apple unveiled an independent study Wednesday which maintains that 30% is very much within the commission structure norm, compared to the rates across 38 digital marketplaces. Such marketplaces include app and software sellers, video game platforms and companies offering eBooks and other digital content.

The study, which was conducted by the Analysis Group economics consulting firm--but it must be noted, Apple paid for--found that most app stores and video game marketplaces charge the same 30% rate as Apple does, with some lowering the commission for digital subscriptions after a year.

Apple itself drops the rate for subscriptions to 15% after 12 months, same as Google.

The Amazon Appstore, which also charges 30% according to the study, drops video streaming subscription rates after a year to 20%.

“Our study shows that Apple’s App Store commission rate is similar in magnitude to the commission rates charged by many other app stores and digital content marketplaces,” the authors wrote.

The study also examined commission rates charged by e-commerce merchants, ranging from general retailers such as Amazon (8% to 17%) and Ebay (10% to 12%) to ride sharing leaders Lyft (20%) and Uber (25%).

The authors added that developers earn a substantially higher share of total sales made through digital marketplaces than through many brick- and-mortar channels.

For example, the study claims 55% of the brick-and-mortar retail price of video games does not go to developers and publishers, and prior to the advent of digital software downloads, 60–70% of the price went to intermediaries.

The App Store brings in about $15 billion annually to Apple, according to analyst estimates cited by the Journal.

It remains to be seen, of course, what kind of impact the data presented in the study will have in persuading lawmakers that when it comes to commissions anyway that Apple is playing fair.

Cook will be testifying before Congress on July 27 along with fellow Big Tech leaders Sundar Pichai of Alphabet, Jeff Bezos of Amazon, and Mark Zuckerberg of Facebook.


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