Phil Schiller, the Apple executive in charge of the App Store, raised the possibility that the company cut its commission rate 30 percent to 25 or 20 percent in 2011 in response to competition. Schiller sent the idea in an email to Steve Jobs, Apple’s CEO and Apple Chief Service Officer Eddy Cue.The email was made public as part of the company’s legal battle with Epic Games. Bloomberg Be the first to report on email exchanges.
“Do we think our 70/30 division will last forever?” Schiller email began, “I think someday we will see enough challenges from other platforms or web solutions that need to adapt our models. Schiller continues that if Apple ever changes its fee structure, it should do so “from a strong position rather than a weakness,”; and it makes the idea of Apple lower its commission rates as the App Store generates more than $ 1 billion. In annual profit
“I know this is controversial. I just raised it as another way of considering the size of the business, what we want to achieve, and how we can compete,” Schiller wrote. ”Attached to e-mail is file Wall Street Journal An article from 2011 discussing the possibility of developers using web apps to avoid Apple’s App Store fees.
Apple’s 30 percent commission for bulk in-app purchases is at the center of a legal battle with Epic Games, accusing the App Store linked to iPhones and iPads as a monopoly. In-app purchases inside Fortnite (And as a result, it pays 30 percent in commission), and it was the switch to the company’s own in-app payment system that forced Apple to kick the game from the App Store.
In response to the e-mail, Apple said there was no evidence that App Store fees were tied to its profits, and the 2011 email did not confirm the store made up to $ 1 billion in profits. Bloomberg An analysis report from Sensor Tower reported 2020 App Store commission income was around $ 22 billion, and Epic cited one witness claiming that profit margin was around 80 percent.
Apple has adjusted its commission structure over the years. But it never cut the standard wholesale rate to 25 or 20 percent. In 2016, commissions dropped to 15 percent for members who have signed up for more than a year. Then last year it cut the rate to 15 percent for developers with under $ 1 million in-store sales. The move was fueled by Apple critics, with Epic CEO Tim Sweeney calling the decision a “no-brainer”. “A move calculated by Apple to divide app creators and maintain store and payment monopoly, breaking the promise of treating all developers equally.”