Amazon said this week that it would reduce the Appstore commission rate for less successful developers, following recent similar moves from Apple and Google, and sweeten the deal by offering AWS credits to support apps’ backend services.
“Starting in the 4th quarter, for developers who earned less than $ 1 million in revenue in the previous calendar year, we’re increasing the development revenue share and adding AWS credit options,” said Palanidaran Chidambaram, CEO of Amazon Appstore, in a blog post. “This provides total program benefits up to the equivalent of 90 percent of revenue.”
Amazon will allow developers to keep 80 percent of app revenue, and keep 20 percent to themselves. The company proposes that those who use AWS credits will add an additional 1
Amazon Appstore supports the company’s Android fork, FireOS, which powers its Fire tablets and TVs, as well as Echo-smart speakers. It also distributes Android apps and can be installed on Android phones as an alternative to Google Play.
Google in March this year said it plans to halve the Google Play Commission by 30 percent for developers earning less than $ 1 million annually, starting in July.
Apple last November dropped its standard 30 percent App Store commission to 15 percent for the set below $ 1 million, an initiative CEO Tim Cook described as an attempt to “help small business owners” – probably not the same small business owners. Facebook has accused Apple of harming itself with its lack of privacy control.
It is fitting that the overall economic impact of these eligible Commission reductions is likely to be small. App analytics biz Sensor Tower last year noted that iOS app makers earn less than $ 1 million annually, a group that includes 97.5 percent of all app publishers, accounting for just 4.8 percent of the Apple App Store’s revenue of $ 59.3 billion from January to October 2020. Among Google Play developers, 99 percent earn less than $ 1 million annually.
Amazon’s onslaught of targeted generosity comes just a week after U.S. House lawmakers proposed a five-bill bill targeting Amazon, Apple, Facebook and Google. The bills seek to curb platform monopolies, ban self-preferences, prevent anti-competitive mergers, reduce barriers to switching services and update antitrust laws, although there is ongoing debate over whether these proposed statutes are worded in a way that will actually advance their stated goals.
Critics of current app store commission structures, such as Epic Game CEO Tim Sweeney, have rejected rate cuts as PR trails. Epic, which sought the freedom to use a payment system other than Apple’s own app, sued Apple last year in an attempt to escape the company’s rules. With the trial now over, Epic, Apple and millions of developers await the judge’s ruling.
Coalition for App Fairness, a group of more than 50 companies including Epic, claims Apple’s transaction fee, 30 percent or 15 percent, is excessive compared to the average 3 percent charged by credit card payment processors. And that feeling has spread across the pond.
In a complaint [PDF] Against Apple’s commission structure filed with the UK Competition Appeal Tribunal last month, King’s College lecturer Dr Rachel Kent claims that a US congressional inquiry estimated that Apple earned $ 15 billion in global annual revenue for its App Store, at an operating cost of just $ 100. millions.
“Apple accomplishes this by imposing unfounded charges on users,” Kent said. “It would not be able to impose these exorbitant costs if competing platforms and payment systems were allowed to compete on their devices.”
Amazon’s Appstore (~ 686,000 apps), lags behind the Apple App Store (1.75 million apps) and Google Play (~ 3.4 million apps) in terms of app numbers, but the company’s decision to expand an olive branch to developers is no less important as a bellwether of the competitive, regulatory, and legal pressures that beat the best American technology platforms. ®