Apple to lower App Store fees for smaller developers

Apple Inc on Wednesday said it plans to start a program to lower its App Store commissions for software developers who make $1 million or less in proceeds each year from the store.

Apple takes a 30% cut of most purchases made on the App Store, although the commission drops to 15% for subscriptions that remain active for more than a year.

Apple said Wednesday developers will automatically get the lower 15% rate if they generate $1 million or less in proceeds - defined as the portion of App Store purchases that the developer keeps - in a calendar year.

Apple's App Store fees and rules have come under fire from both large software firms such as Microsoft Corp, Spotify Technology SA and Match Group Inc as well as numerous startups and smaller companies that allege the fees deprive consumers of choices and push up the price of apps.

Apple has responded by saying its rules apply evenly to developers and that the App Store provides an easy way to reach its huge base of users without having to set up payment systems in the 175 countries where it operates.

Apple said the new program will start on Jan. 1, 2021.

Software developers who netted less than $1 million from the App Store this year will qualify for the 15% rate next year. If the developer's proceeds rise above the $1 million threshold the next year, Apple's standard rates kick in for the rest of that year. If the developer's proceeds fall below $1 million in a given year, they become eligible for the lower rate the next year. 

"Small businesses are the backbone of our global economy and the beating heart of innovation and opportunity in communities around the world," Apple Chief Executive Tim Cook said in a statement.

Apple said it will give more details on which developers qualify next month.

(Reporting by Stephen Nellis in San Francisco; editing by Richard Pullin)