Apple today it is once again grappling with the press to counter the claims of anti-competitive practices on its App Store. Last month, the company detailed the results of a commissioned study that showed that Apple is not getting a cut in revenue on most App Store transactions - $ 519 billion in commerce. This time, Apple is advertising the results of a new study that aims to demonstrate how the Apple App Store commission rate is similar to that of other app stores and digital content markets.
The new study also comes from the analysis group, the same group of analysts used by Apple for its most recent study. The fact that Apple instructed the company to present a series of reports to argue its case through market data indicates how much Apple takes antitrust claims seriously.
Today, Apple is addressing antitrust investigations in both the U.S. and EU regulators not only are looking at Apple, but also other high-tech companies, including Google, Amazon and Facebook, to determine if they have used their size and competition power. Apple CEO Tim Cook, in fact, is ready to testify before the antitrust subcommittee of the Chamber's judiciary on Monday 27 July, making the release of the study even more timely, not to mention an obvious attempt to move the narrative in favor of Apple .
The case against the App Store is complicated.
The anti-competitive behavior argument stems from a number of factors: that Apple requires developers to process payments through its payment system, giving it a reduction in transactions, rather than allowing the use of third-party payment processors; that Apple competes with third-party developers on the same platform, while benefiting from the activities of its competitors; that Apple does not allow developers any other means of distribution on its iOS platform besides listing on the App Store, which limits the publication of all types of apps; that Apple offers its first-party apps deeper and more granular access to the controls and functionality of its operating system; and finally that the cost of doing business on the App Store - typically a 70/30 division between Apple and developers - is simply too high for the services provided and is not universally applied.
This last point is what Apple wants to dive into today.
The new study details the Apple App Store commission rate and compares it to other two-sided markets. On the iOS App Store, Apple's commission is 30% for paid apps, in-app purchases of digital content and services, and the first year for in-app subscriptions. It drops to 15% after the first year for subscriptions.
This study points out that most app stores and video game markets have the same structure as Apple's commissions (30%). This includes the Google Play Store, Amazon Appstore, Samsung Galaxy Store, Microsoft Store, as well as gaming markets on the Xbox, PlayStation, Nintendo and Steam platforms (Steam is 30% for sales of less than $ 10 million). Some stores reduce the commission rate by 30% in specific cases, for example Steam lowers it to increase sales; Amazon charges 20% commissions on video streaming subscriptions; Xbox charges 15% for non-game subscriptions and so on.
Epic Games, the manufacturers of Fortnite and one of the largest companies arguing against the current App Store model, charge 12%. It also stated in particular that a lower fee can help fuel developer innovation and increase competition.
The new study also details the fees for a wide range of non-store / game store platforms, including digital content platforms, e-commerce markets, and even retailers.
Among the digital content platforms, the study examines companies such as Roku, YouTube, Amazon Prime Video Direct, Spotify's Anchor, Nook, Audible, Patreon and others, many of which are 30% or higher. Emphasize that e-commerce markets sometimes exceed 30% commission rate. This part of the study monitored commissions in 17 major digital markets, including Amazon, eBay, Etsy, Walmart, Poshmark, Airbnb, Uber, Lyft, Stubhub, Ticketmaster, TaskRabbit and others.
The study also notes that developers can make more money through digital distribution than through brick, which is indeed a strange point of comparison.
The report is useful in terms of centralizing all these commission data for easy reference in one place, as companies often hide the commission structure in depth in the Help documentation, if they publish it openly. But it is also, in general, common knowledge - and the point is completely missing. The antitrust issues surrounding the Apple App Store are not concerned with the fact that Apple is charging More compared to other digital markets. It is a question of whether the commission structure hampers competition, given Apple's size, wealth and power.
Apple could have overcome this entire problem by simply lowering the percentage of commissions and expanding its existing cutout for what it calls the "reader app", those that allow users to access previously purchased content or subscriptions. Today, reader apps include magazines, newspapers, books, audio, music, video, professional database access, VoIP, cloud storage and other approved services such as classroom management apps. This is, for example, the way streaming services like Netflix are allowed to distribute an app that doesn't offer registration, only access.
But instead, Apple is doubling. The fact that the company is fighting for its 30% commission, openly claiming that the commission is both trivial and fair, is an indication of the growing importance of Apple's service activities for its profits.
This activity is guided by the digital content and services segment, which includes the App Store. In the second quarter of 2020, Apple Services revenue reached an all-time high of $ 13.35 billion, up from $ 11.45 billion in the same quarter last year. With each quarter, services become more critical to Apple's overall growth as a company, particularly as the smartphone market becomes increasingly saturated and new economic pressures, such as the pandemic, are dampening iPhone sales.
