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Apple exec proposed cutting the App Store commission to 20 percent as early as 2011

Phil Schiller, Apple director in charge of the App Store, raised the possibility that the company reduced its 30 percent commission rate to 25 or even 20 percent back in 2011 in response to competition. Schiller floated the idea in an email to then-Apple CEO Steve Jobs and head of Apple services Eddy Cue. The email has been published as part of the company’s legal battle with Epic Games. Bloomberg was the first to report on the email exchange.

“Do we think our 70/30 split will last forever?” Schiller’s email begins. “I think one day we will see enough challenge from another platform or web-based solutions to want to tweak our model.”

; Schiller goes on to suggest that if Apple were ever to change its fee structure, that it should do so “from a strong position rather than weakness” and floats the idea that Apple drops its commission when the App Store generates over $ 1 billion $ in annual profit.

The email was released as part of Epic’s lawsuit against Apple.
Image: Legal documents

“I know this is controversial. I’m just writing about it as a different way of looking at the size of the company, what we want to achieve and how we stay competitive, ”Schiller wrote. “Just food for thought.” Attached to the email is one Wall Street Journal 2011 article that discussed the possibility of developers using web apps to circumvent Apple’s App Store fees.

Apple’s 30 percent commission on many in – app purchases is central to its legal battle with Epic Games, which has accused the App Store of tying iPhones and iPads to a monopoly. Epic is required to use Apple’s payment method for in-app purchases Fortnite (and therefore pay 30 percent commission), and it was the company’s shift to offer its own in-app payment system that prompted Apple to kick the game out of the App Store.

In response to the email, Apple said there was no evidence that the App Store fees were tied to its profits, and that the 2011 email did not confirm that the store earned $ 1 billion. In profit, Bloomberg reports. Analysis from Sensor Tower has the App Store’s commission revenue in 2020 of around $ 22 billion, and Epic quotes a witness who claims that its profit is around 80 percent.

Apple has adjusted its commission structure over the years, but has never dropped that standard interest rate to 25 or 20 percent. In 2016, it dropped its commission to 15 percent for subscribers who have signed up for a service for over a year. Then last year, its rate dropped to 15 percent for any developer earning less than $ 1 million in sales at its store. The move saw setbacks from Apple critics, with Epic CEO Tim Sweeney calling the decision “a deliberate move by Apple to split app creators and maintain their monopoly on stores and payments, which in turn breaks the promise to treat all developers equally.”

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