Apple releases study to justify App Store business model ahead of antitrust hearing


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Image: Apple

Apple has released a new study to purport that the commissions gained from its app store are in line with other app stores and digital content marketplaces.

The company’s attempt at building a picture that its app store practices are comparative to other digital marketplaces come a week ahead of a US House Judiciary Antitrust Subcommittee hearing, where Apple CEO Tim Cook will be questioned over the company’s practices and whether it has stifled competition. 

The hearing will also see the top executives of Amazon, Facebook, and Alphabet undergo questioning. 

The study [PDF], conducted by Analysis Group, compared the Apple App Store’s commission rate with other digital app marketplaces, such as the Google Play Store, Amazon App Store, Samsung Galaxy Store, and Microsoft Store, as well as other marketplaces operated by companies such as Airbnb, Uber, and Epic Games. 

According to the study, Apple charges a 30% commission when device owners download paid apps and make in-app purchases of digital content, services, and subscriptions — leaving developers with 70% of sales. For in-app subscriptions, Apple charges a 30% commission for the first year and after that, Apple’s commission falls to 15%. 

The other major app stores — like the Google Play Store, Amazon App Store, Samsung Galaxy Store, and Microsoft Store — also have a 30% commission rate for app downloads and in-app purchases, but each have their own set of exceptions. For example, Google Play’s commission rate for subscriptions is 15% after 12 months, Amazon’s commission is 20% for video streaming subscriptions, and the Galaxy Store charges a 30% standard commission rate but it has stated that this rate may be negotiable. 

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Image: Apple

The study added that now-defunct app stores, such as BlackBerry World, the Windows Phone Store, the Nokia Store, also had similar commission rates of being around 30%.

According to the study, the fees taken from digital marketplaces are justified as they enable and facilitate transactions, as well as make investments that support the download of apps and in-app purchases. 

“Transaction-based commission rates lower the barriers to entry for small sellers and developers by minimising upfront payments, and reinforce the marketplace’s incentive to promote matches that generate high long-term value,” the study said.

The study detailed, however, that Epic Games, the makers of Fortnite, only charges 12%. Epic Games CEO Tim Sweeney has previously tweeted in opposition against Apple’s App Store fee model.

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Image: Apple

The study added that Apple imposes guidelines for in-app purchases that prevent users and developers from “free riding” on Apple’s App Store services and investments. For example, apps cannot explicitly steer app users away from in-app purchases by providing external links that bypass the app store. 

Apple has been facing scrutiny from the US Justice Department since June last year, when it started an antitrust investigation over the US tech industry’s competitive landscape. 

The European Union also last month opened a set of antitrust investigations into whether Apple’s rules for developers who distribute their apps via the company’s app store violate EU competition rules. 

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