App Developers Oppose App Store Commission Rate; Company May Suffer Nearly $16 bn Loss

An analyst reports that iOS app developers are opposing Apple's App Store commission rate. Moreover, regulatory intervention could also force Apple to reduce the commission rate.

In less than 48 hours Apple faces two setbacks. Netflix is “testing the iTunes payment method.” More specifically, the video streaming company is testing how to bypass iTunes. Another shocking news came from Macquarie Research note, which was seen by Business Insider.

As per the note, the developer community is opposing the commission rate levied by Apple on paid apps and in-app purchases. Additionally, some regulatory interventions accuse Apple of using a monopolistic position in the iOS app market.

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Opposition from Developers and Regulatory Intervention May Force Apple to Cut AppStore Commissions

Apple charges 30% commission on paid apps, in-app purchases, and first-year subscriptions; from the second year onwards, Apple reduces in-app subscriptions to 15%. As per Ben Schachter, Apple should change this.

“We believe that the traditional… commission rates for app distribution may come under pressure,” Schachter said in the note, adding, “Changes in the commission rates would meaningfully impact profits.”

Apple […] could take a $16 billion hit to its adjusted earnings if it’s forced to make a significant cut to its App Store commission rates, he said in the note.

Game developers have also registered their opposition against Google as both companies charge high levels of commissions. Notably, Epic Games had cut ties with Google’s Play Store when the developers launched Fortnite on Android. However, the game continues to perform well on Apple’s AppStore.

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The note from Schachter also reveals that Apple will have to face some legal challenges, as the company is already facing an antitrust lawsuit regarding its monopolistic position in the iOS market.

In case Apple wins the lawsuit, the issue can be brought to the notice of regulators, who may take further actions.

According to Schachter, Apple is planning to generate nearly $20bn in App Store revenue by 2020. This amount will be more than a quarter of Apple’s total projected earnings.

If the company is forced to slash its commission rate to 15%, its App Store revenue would be reduced to $11.2bn.

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Summing up…

Earlier this month, it was reported by Ewan Spence that Apple has canceled its affiliate marketing scheme and crippled iPhone app economy.

Now, this fresh trouble brings more financial loss to the company. If government authorities exert more pressure on Apple, the company would be in a tight corner and has to take some concrete actions.

You may also like to refer more news:

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Jignesh Padhiyarhttps://www.igeeksblog.com
Jignesh Padhiyar is the founder of iGeeksBlog.com who has a keen eye for news, rumors and all the unusual stuff that happens around iPhone and iPad.

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