Phil Schiller, Apple’s CEO in charge of the App Store, increased the company’s ability to reduce its 30 percent commission to 25 or even 20 percent in 2011 in response to competition. Schiller sent the idea in an email to then-Apple CEO Steve Jobs and Apple Services chief Eddy Cue. The email was published as part of the company’s legal battle with Epic Games. Bloomberg was the first to report email exchanges.
“Do we think our 70/30 split will last forever?” Schiller’s email begins. “I think one day we will see enough challenge from another platform or web-based solution to want to adjust our model.”
“I know it’s controversial, I’m just presenting it as another way to look at the size of the business, what we want to achieve and how to stay competitive,” Schiller wrote. “Just food for thought.” Attached to email Wall Street Journal a 2011 article discussing the possibility of developers using web applications to circumvent Apple’s App Store fees.
Apple’s 30 percent commission on many in-app purchases is key to the legal battle with Epic Games, which has accused the iPhone and iPad App Store of being a monopoly. Epic is required to use Apple’s payment method for in-app purchases within Fortnite (and therefore pays a 30 percent commission) and it was the company’s switch to offering its own in-app payment system that prompted Apple to drop the game from the App Store.
In response to the email, Apple said there was no evidence that the App Store’s fees were tied to its profits and that the 2011 email did not confirm that the store had made a profit of $ 1 billion. Bloomberg reports. An analysis by Sensor Tower shows that the App Store’s commission revenue for 2020 is about $ 22 billion, and Epic cites a witness who claims that its profit percentage is about 80 percent.
Over the years, Apple has adjusted its commission structure, but has never dropped the standard wholesale rate to 25 or 20 percent. In 2016, it reduced its commission to 15% for subscribers who have subscribed to a service for more than a year. Then, last year, he reduced his percentage to 15 percent for all developers who sell below his store below $ 1 million. The move was repulsed by Apple critics, with Epic CEO Tim Sweeney calling the decision “Apple’s clever move to split app developers and maintain their monopoly on stores and payments, again undermining the promise of equal treatment for all developers.” “.