87% app makers don’t pay for Apple store, 97% for Google Play: Report | Business Standard News

Clipped from: https://www.business-standard.com/article/companies/only-17-out-of-21-000-app-developers-pay-apple-30-commission-report-122122900990_1.html

Apple and Google charge up to 30% commission from software developers

app store

Contrary to popular perception, only 0.08 per cent or just 17 of the 21,000 Indian apps or app developers who are live on the Apple Store pay 30 per cent commission to the company. The majority — 87 per cent — of the developers on the Store do not pay any commission, according to Apple executives who deposed before a parliamentary standing committee on finance looking into ‘anti-competitive practices by Big Tech companies’.

This information was contained in the committee’s report published in late December.

Google told the committee that only 3 per cent of Indian developers on its Play Store paid a service fee. The remaining 97 per cent could distribute their app on the Play Store and utilise all the developer tools and services at no cost. Google has been in the crosshairs of the Competition Commission of India (CCI), which fined it recently for allegedly abusing its dominant position with its Play Store policy.

Google told the committee members that the ones who pay are those who charge users for their apps or offer digital content for purchases within their app and the user makes the purchase. The depositions come against the background of growing global concern over Apple’s and Google’s app stores. Moves are underway in some countries to introduce legislation to break their stranglehold and spur competition so that software developers can access the iPhone or an Android phone without going through the respective app stores.

In the US and Europe, legislation is being finalised to allow ‘sideloading’ of apps. This allows app developers to load their applications without using the app stores of either Apple or Google. Even in India, the CCI has ordered Google to permit sideloading.

The global grouse is that the two tech giants who charge up to 30 per cent as commission from software developers and force them to use only their own payment gateways, are making huge services revenues.

Apple’s deposition argues that the perception that all apps pay commission is incorrect. The principle of charging commission is well defined – the commission is applicable only on apps selling digital goods and services and not physical goods and services.

Experts say that in simple term, this means that most popular apps such as Amazon, Flipkart, Zomato, Swiggy, Ola, Uber, and Policybazaar do not qualify to pay the standard 30 per cent commission.

MONEY MATTERS

The criticism

  • Apple and Google charge up to 30% commission from software developers
  • They only allow use of their own payment gateways, and make huge services revenues

Big Tech’s defence

  • Only apps selling goods and services consumed digitally have to pay commissions, i.e., gaming, music streaming, and OTT streaming platforms

It is big companies such as the big OTT platforms and India’s big gaming and music streaming companies which qualify to pay as their services are consumed digitally. Even here though, the 30 per cent commission applies only to apps which make more than $1 million as ‘post commission earnings’.

Start-ups and small businesses can enjoy the advantage of the Apple Store’s small business programme under which developers have to pay only 15 per cent if they have earned less than $1 million in the previous calendar year. This represents the bulk of the developers.

If developers surpass $1 million, they have to pay 30 per cent but if their earnings fall below this in the next calendar year, they pay 15 per cent commission. Google has been rationalizing its service fees in India too. Today, 99 per cent of developers qualify for a service fee of 15 per cent or lower.

In July 2021 it reduced the service fee on the first $1 million in annual developer earnings to 15 per cent.

Later that year, in October, Google changed the fee model for subscriptions from 30 per cent to 15 per cent and further reduced it to 10 per cent for specific verticals of apps under the Play Media Experience Programme.

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