“Grumbling about app store economics isn’t new. But the number of complaints, combined with new ways of reaching users, regulatory scrutiny and competitive pressure are threatening to undermine what have become digital goldmines for Apple and Google,” Bergen and Palmeri report. “Apple and Google launched their app stores in 2008, and they soon grew into powerful marketplaces that matched the creations of millions of independent developers with billions of smartphone users. In exchange, the companies take up to 30 percent of the money consumers pay developers.”
“‘It feels like something bubbling up here,’ said Ben Schachter, an analyst at Macquarie. ‘The dollars are just getting so big. They just don’t want to be paying Apple and Google billions,'” Bergen and Palmeri report. “Apple and Google take 30 percent of subscription dollars and in-app purchases made on iPhones and Android phones using Google’s app store (effectively all those outside China). About two years ago, the companies lowered that cut to 15 percent in some cases. If app store commissions fell to a blended rate of 5 percent to 15 percent, that would knock up to 21 percent off Apple’s earnings, before interest and tax, by fiscal 2020, Macquarie estimated. Google could lose up to 20 percent by the same measure, according to the brokerage firm.”
Read more in the full article here.
MacDailyNews Take: It does cost money to run Apple’s App Store and it’s certainly the most visible, effective, and efficient means of distribution the planet has ever seen. Again, this is capitalism at work. If enough developers can avoid the App Store and make more money then Apple will have to address their App Store fees (and Google will follow, as always). If not, then the cost of deploying via the App Store is worth Apple’s asking price.
Netflix tests a bypass of Apple’s iTunes Store billing in 33 countries – August 21, 2018