Apple Reduces App Store Cut From Developers After New Epic Games Lawsuit
It seems that the wave of change and disagreement with Apple’s practices regarding the App Store has resulted in something happening. After a new lawsuit was formed, Apple announced that it would reduce the App Store cut from developers moving forward.
Apple Reduces Its App Store Cut
This announcement comes at the same time as a new lawsuit has been issued by Epic Games, the developers of Fortnite battle royale, who has been in a battle with Apple over in-app purchases and revenue for a couple of months now.
The latest lawsuit was given in the Australian federal court system where Epic Games has attempted to challenge the massive tech company in that country, in addition to what is already happening in the United States. This new lawsuit from the Fortnite developer happened on a special day.
On the same day that the lawsuit was formed, Apple also announced (via The Guardian) that it would be finally reducing the App Store cut that it takes from developers on the mobile service from now on. This change is a massive one that goes a long way towards addressing some developers’ issues.
Before now, Apple would take a massive App Store cut of 30% from every single paid app sold on an iOS device and for any in-app purchases that happened with apps downloaded from the App Store, like Fortnite battle royale and the almost two million others.
Apple Will Only Take 15% From Some Developers
Thirty percent is a massive chunk of change, but that is how much Apple would get from every single app just for allowing it to be on their platform. But fortunately, it looks like the tech giant is making a change. The App Store cut has cut in half to only 15% for some developers on iOS.
It is worth noting that this only affects smaller developers on the App Store who don’t make nearly as much money as the bigger apps that dominate the scene who will still have the 30% commission that goes to Apple. This new pay cut only affects developers who earn less than a certain amount.
Developers who earn no more than $1 million in revenue from the App Store, including every single one of the apps they own, will only have to pay 15% to Apple as its cut for the year. If a developer makes more than $1 million, they will have to pay the 30% cut for everything after that.
It works because if a developer makes $1 million or less, they will only need to pay 15% to Apple for hosting its apps. This revenue total includes all of the apps that a company has on the store, which could add up fast if the developer has several modestly successful apps or games.
This Only Affects Revenue Under a Certain Threshold
Fortunately, if a company does pass the $1 million mark, they will only be charged the 30% cut for Apple for the money made after that and not also on the original $1 million. So, for example, let’s say that a company made $2 million across all of its apps for a single year.
The company will then pay Apple $150,000 for the first half of that revenue as that is the lower pay cut that Apple recently announced. But for the second half of the revenue, it would rise to $300,000, so the company would then owe Apple a total of $450,000 for what it made that year.
This seems to reset every single year, so a company could theoretically not pass the $1 million threshold one year and then do so the next year, resulting in differing payments to Apple every single depending on how it performs.
What is great about this change is that it begins this year, so any developer who makes up to $1 million in 2020 will automatically feel the results of this as they won’t have to pay as much money as they would have this change happening.
This Change Will Likely Not Affect Epic Games Much
Apple made it clear that this change will affect most of the 1.8 million apps currently in the App Store. Of course, this does not positively affect major corporations like Epic Games, even though it could be why this whole thing is because of how large the company is.
According to forecasts, Epic Games is set to make around $5 billion this year, across all platforms. More than $1 million will likely come from the iOS devices despite the crazy stuff that happened this year between Apple and the Fortnite developer.
The whole situation began in the summer of this year when Epic Games decided to circumvent the App Store’s revenue cut and charge whatever it wanted for the Fortnite V-Bucks digital currency on all platforms, passing along the discount to customers in the process.
According to Apple, this broke the terms of agreement that Epic Games agreed to. The company swiftly removed Fortnite from the App Store. Epic followed suit immediately with a lawsuit that is ongoing currently in the U.S. and has been supplemented by another one now in Australia.
It is uncertain if Google will follow suit after this App Store cut change that Apple has made and have a reduced commission for those developers who make only a certain amount. At this time, Google also charges 30% of any revenue made through the Google Play Store.