Google is already preparing to do this in South Korea, as a result of recent legislation there.
Commissions on outside payment methods are something most analysts agree are specifically allowed under the terms of the Epic v. Apple ruling, but 'allowed' and 'preferable' are quite different — one theory I've seen is that this filing is simply leverage, intended to get a stay on the ruling that is due to allow links to external payment methods starting on December 9.
Apple’s App Store and Other Digital Marketplaces [PDF]
Apple sponsored a study to compare commission rates charged by popular digital marketplaces (which includes the App Store, but also Uber, Airbnb, Etsy, Roku, Steam, and so on).
As evidence of the second point, yesterday saw some interesting whiplash on Hacker News: two of the day’s most popular comment threads were an [incorrect] report that Apple keeps their 30% cut even after a refund, and then the follow-up correction that no, they actually don’t do that anymore.
Google Play to pilot third-party billing option, starting with Spotify
Yes, this is the mythical 'third-party in-app payment option'.
No, this is not a 'get-out-of-commission-free card'.
The details of this pilot program are not public, but that doesn't mean we're without precedent: Google already offers a similar program in South Korea, and the commission rate is only reduced by 4% for non-Google payment methods.
The Small Business Program is a huge, clever U-turn by Apple
Via a middle-of-the-night press release, buried in the middle of this week's Apple Silicon MacBook noise, Apple just announced a new program to cut App Store commission rates from 30% to 15%…for ‘small businesses’.
In other words, commission rates are cut in half for all of the companies that hadn’t really been complaining all that loudly (perhaps because they lacked a tall enough soap box), but which everyone was assuming made up the silent majority.
It’s a great chess move. The impact on Apple’s App Store revenue will probably be statistically insignificant, and the big tech companies that are complaining loudly now look a whole lot more lonely.
This week, Apple released a couple of self-serve tools to help developers promote their apps.
They're…basic. But maybe a sign of more to come? After all, a robust array of tools integrated directly with the App Store could help justify that 30% commission rate…
Their Businesses Went Virtual. Then Apple Wanted a Cut.
At the risk of going overboard this week on the topic of App Store commissions, here’s a perfect illustration of the system’s quirks: COVID has forced business models to adapt, and formerly-offline activities like gym classes are now online gym classes.
…which suddenly makes payments for them subject to Apple’s 30%.
Remember a few years ago, when Facebook made algorithm changes and publishers swore to get serious about revenue diversification?
Turns out many of those publishers ‘diversified’ right into the open arms of Amazon’s affiliate program, which announced this week that commission rates would be cut in half. Ouch.
The Apple v Epic lawsuit is ongoing (recap: Fortnite tried to enable in-app purchases without going through the App Store framework, and got kicked off the platform by Apple in response), and it's bringing to light some very interesting details.
This thread is FULL of fascinating scoops, but the clear theme is that Epic wants to demonstrate that the App Store's benefits aren't worth Apple's 30% commission.
Bloomberg dropped an explosive-sounding report this week: Apple to Allow Outside App Stores in Overhaul Spurred by EU Laws (here's an alternative TechCrunch article, if you aren't a Bloomberg subscriber).
Most of the media is talking about this story like some sort of bombshell scoop, but it really shouldn't be a surprise — the bones of the the Digital Markets Act (the 'EU Laws' referenced here) have been an open secret for a while.
It's good to see progress on this, but I've said it before (more than once) and I'll say it again: this is the worst outcome for pretty much everyone involved. Yes, there are many issues with walled garden app stores, but there are also major benefits (no one really wants a return to the days of Windows 98, when an antivirus scanner was the only thing standing between your computer and total anarchy). The unwillingness shown by Apple and — to a somewhat lesser degree — Google towards engaging in any sort of thoughtful compromise is leading to 'product roadmap by regulation'. And since that is basically how we got into cookie consent banner hell with GDPR, I don't think anyone is going to be thrilled with the outcome this time either.
John Koetsier has a great piece on all the open questions around what this new, multi-store world would look like, but I think the key point is this: the primary driver here is pretty obviously a challenge to the 15-30% commission rate. And we already have a clear playbook — going back years — for how Apple and Google respond in these scenarios: they will give only the bare minimum in concessions necessary to comply with the literal letter of each new law.
These changes will be no different, which means we should expect them to come with UX requirements designed to make things as unappealing as possible…and some other way to collect an equivalent amount in fees. This is scorched earth, trench warfare, and the unfortunate thing is that it's just ultimately harming the broader mobile ecosystem.
PS, barring some unforeseen, apocalyptic event, this will be the final Mobile Growth News of 2022. Thanks for reading, for your thoughtful replies (I respond to all of them!), and for coming along for another year of mobile growth. Happy holidays, and see you all again in 2023!
Google will reduce Play Store cut to 15 percent for a developer’s first $1M in annual revenue
Google is responding to Apple's App Store Small Business Program, which reduces the App Store commission to 15% for select developers (with some fairly strict limits and caveats). However, Google is upping the ante in the process: their new Play Store program applies to the first $1 million in earnings for all developers.
This handily avoids the 'revenue cliff' problem some iOS developers face, where they suddenly find themselves out of the Small Business program and subject to a flat 30% fee for slightly exceeding the cutoff.
Both policies are obviously good news, but Google's seems simpler and less likely to lead to unpleasant surprises.
