DEVELOPERS CAN NOW AVOID THE NOTORIOUS 30% APPLE TAX

According to a recent report by Bloomberg’s Mark Gurman, Apple is planning to allow iPhone users to sideload apps for the first time. However, this feature won’t be available until iOS 17 is released. This change could also mean that app developers won’t have to pay fees to list their programs in the Apple App Store. Sideloading apps refers to the ability to download apps from sources other than the official App Store without having to list the program on the Apple App Store. This would exempt developers from paying the usual 15% to 30% fee to list their programs on Apple’s App Store.

Apple has expressed concerns that sideloading could weaken the security and privacy protections of its devices. The company claims that its security features are relied upon by millions of iPhone users and that allowing sideloading could make them vulnerable to issues like malware, scams, and data tracking.

DEVELOPERS CAN NOW AVOID THE NOTORIOUS 30% APPLE TAX

Despite Apple’s stance, the European Union’s Digital Market Law (DMA), which became effective on November 1, 2022, requires Apple to open up its services and platforms. Failure to comply with the EU laws could result in substantial fines for Apple. The practice of sideloading could potentially expand beyond the EU if other countries implement similar legislation. For instance, the U.S. is also considering enacting laws that would require Apple to permit sideloading.

The introduction of sideloading on iPhones could have significant implications for both developers and Apple. Developers can use this feature to avoid paying fees to list their programs in Apple’s App Store. However, Apple may need to modify its policies to comply with the European Union’s digital market law.

At the same time, this change could impact the privacy and security of users, and caution should be exercised when using it. Some users have argued that those who choose to sideload apps are aware of the risks involved. If Apple is genuinely concerned about security, a simple prompt warning users about the dangers of sideloading before they install any app would be a useful addition.

APPLE TAX – THE HISTORY

The 30% commission charged by Apple on transactions made through the App Store has been a contentious issue for many years. This commission, also known as the “Apple Tax,” has been the subject of debate due to its impact on app developers’ revenues. Let’s take a look at the history of the 30% cut and recent changes made by Apple to address concerns raised by developers.

Apple introduced the 30% cut in 2008, applying it to any purchase of an app from the App Store. A year later, Apple extended this commission to any transactions made within apps for digital goods and services, such as subscriptions to music, TV, or dating apps or virtual currencies in games. However, Apple doesn’t charge any commission on apps’ sales of ads or physical products. Initially, there was less resistance from app developers, mainly because the App Store was still in its infancy, and digital transactions were complex without Apple’s assistance. According to Phillip Shoemaker, a former senior App Store executive who left Apple in 2016, “with Apple, it was pretty much one click, and that was it.”

CRITICISMS OF APPLE TAX

The 30% commission charged by Apple has faced criticism from app developers, including game company Epic and music service Spotify. They argue that this commission is too high, and Apple’s right to a large cut of their sales is unfair. Even Tesla CEO, Elon Musk, has voiced his concerns about Apple’s App Store fees, stating that the commission taken by Apple from developers is “definitely not okay” and likening it to a “30% tax on the internet.” Musk has also claimed that the commission is “literally 10 times higher than it should be.”

In 2020, the App Store commission became the centre of a legal battle between Apple and Epic Games, the developer of the popular game Fortnite. Epic Games claimed that the commission was anti-competitive, and the lawsuit brought the issue of the App Store commission into the public eye.

RECENT CHANGES MADE BY APPLE

In September 2021, Apple made changes to its policies, allowing media apps such as newspapers and streaming services to add external payment links to their apps to avoid paying Apple a 30% cut of purchases made through the App Store. This decision was made in response to increased scrutiny of Apple’s practices. Under this new policy, companies can share a link to their website with App Store users who sign up for a subscription, bypassing Apple’s in-app payment system. However, Apple will still earn a 30% fee for payments made by users who subscribe to these services.

In addition, Apple launched the App Store Small Business Program in November 2020, which allows developers who make less than $1 million per year in App Store sales to receive a 15% commission for as long as they qualify. This program was introduced as a way to provide smaller developers with some concessions while still allowing Apple to maintain its 30% cut for larger developers.

The imposition of the Apple Tax has had a significant impact on the mobile phone market, with Apple’s premium pricing strategy influencing the pricing of other devices. As a result, many Android brands have introduced premium devices with similar or higher prices than Apple devices, leading to a shift towards higher-priced mobile phones.

In summary, the 30% commission charged by Apple on App Store transactions has been a contentious issue for some time. While some believe that the fee is justified given the convenience that the App Store offers, others argue that it is too high. Apple has responded to these concerns by introducing the App Store Small Business Program and allowing media apps to include external payment links.

The premium pricing strategy has also had an impact on the mobile phone market, with Apple holding a significant share of the premium mobile phone market. However, increased competition has put pressure on Apple to justify its pricing strategy, and the company has responded by introducing lower-priced devices. The debate over the 30% cut is likely to continue as the app economy evolves and expands.

DEVELOPERS CAN NOW AVOID THE NOTORIOUS 30% APPLE TAX