Epic Games and Many Other App Makers Are Not Impressed With Apple's Olive Branch

Source: PlayStation
  • Epic Games and Spotify responded on Tuesday to Apple's decision to cut App Store fees to 15% for developers who make less than $1 million in annual net sales from the App Store.
  • Epic Games CEO Tim Sweeney said it's a calculated move by Apple to divide developers.
  • Spotify called it "window dressing" and called on regulators to act with urgency.

Epic Games and Spotify responded on Tuesday to Apple's decision to cut App Store fees to 15% for developers who make less than $1 million in annual net sales from the App Store.

In short: They're not impressed. App development is a winner-take-most business, and the top 1% most popular publishers on Apple and Google's stores account for about 93% of sales, according to a 2019 estimate from app analytics firm Sensor Tower. Epic and Spotify, who are likely in that top 1% category, view Apple's move as an attempt to blunt criticism while doing little to address the underlying problem of unfair pricing for developers.

"This would be something to celebrate were it not a calculated move by Apple to divide app creators and preserve their monopoly on stores and payments, again breaking the promise of treating all developers equally," Epic CEO Tim Sweeney said on Tuesday.

"By giving special 15% terms to select robber barons like Amazon, and now also to small indies, Apple is hoping to remove enough critics that they can get away with their blockade on competition and 30% tax on most in-app purchases."

Sweeney said Android and iOS need to open up to competition for payments to level the playing field among developers and service providers.

"Apple's anti-competitive behavior threatens all developers on iOS, and this latest move further demonstrates that their App Store policies are arbitrary and capricious," Spotify said. "We hope that regulators will ignore Apple's 'window dressing' and act with urgency to protect consumer choice, ensure fair competition, and create a level playing field for all."

Epic Games and Spotify are among the most vocal Apple critics. Epic sued Apple earlier this year after the game developer released a version of Fortnite that allowed users to skip Apple's in-app payment platform, forgoing Apple's 30% cut, was banned from the App Store.

Spotify has criticized Apple's practice and teamed up with Epic Games, Match Group and other developers to create a nonprofit named "The Coalition for App Fairness" that is fighting for legal action against Apple's in-app commission fees. It also responded to Apple's changes on Tuesday.

A 'symbolic gesture'

The Coalition for App Fairness said that Apple's change was a "symbolic gesture"

"$1,000,001 in revenue is an arbitrary benchmark. Subtract 30% to Apple, 20% to marketing, 30% to taxes and you're left with enough to possibly build and maintain the product — but forget about paying your employees or making a profit."

David Heinemeier Hansson, co-founder and CTO of Basecamp, a project management and team communications app, also spoke out on Tuesday.

"Apple is a $2 trillion company that sells $1,000 phones to consumers that bought those devices and want to use the best apps they can get access to," Heinemeier Hansson said on CNBC's Squawk Alley on Tuesday. "Apple needs to flip this around and look at this and say 'hey hey, these developers are selling our phones, we should be paying them.'" He added Apple shouldn't be "shaking down" developers.

Andy Yen, founder and CEO of the ProtonMail email app said the change is positive but is a "thinly disguised attempt to escape regularly scrutiny."

"It is ironic that Apple, a $2 trillion company, considers that any company making more than $1 million is making way too much money and needs to pay higher fees," Yen said.

"What small businesses need is not a slightly cheaper monopoly, but a real choice of payment methods in the App Store. It is only through allowing real competition in app store payments that truly competitive fees (not 30% nor 15%) can be assured," he added.

The App Association, an industry group that represents app developers, welcomed the policy change.

"Today's announcement by Apple marks an important moment in the evolution of the app economy recognizing the crucial role small business like our members play in the growth and innovation of the app marketplace," App Association president Morgan Reed said in a statement.

The House Judiciary subcommittee on antitrust released a report in October that said Apple has "monopoly power" over software distribution on iPhones but also said Apple's ecosystem has produced benefits to both consumers and developers.

Apple responded to that report and said it does not have a dominant market share in any category where it does business.

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