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Imagine being a beginning developer and hoping to make a living from your work. You distribute your first app, and it turns out to be impossible. You have to face many costs, and the markets fees take the small percent that could have been your profit. Googles Play Market and Apples App Store previously charged developers 30% for all transactions related to their apps. In 2020, Apple reduced the fee for small developers to 15%, and Google did the same in 2021. Yet, these fees are still negatively affecting the market, significantly slowing down the growth of small developers and impairing the healthy concurrence that would exist if fees were lower. These fees make it difficult for small developers to expand because their income is low as they are only starting to gain a bigger audience.
Google and App Store charge developers not only for the sales of their apps if they are not distributed for free but also for the in-app purchases and subscriptions. The fee of 30% was drastic for developers previously, though the current fee of 15% is still a large piece of income considering the other costs that developers have to face (Leswing, 2020). One person does not make most apps; usually, teams of several members are responsible for different functions. These include IT specialists, coders, designers, marketing specialists, and in most cases, developers seek for outsource help that could not be provided solely on enthusiasm. Considering these costs, developers do not make a lot on their apps, especially if they have just begun growing on the market. Therefore, the fee of 15%, even though it does not seem a big number initially, has a strong negative effect on the income of developers.
Another important aspect is companies policy regarding developers creating their transaction systems for in-app purchases. Recently, a lawsuit took place between Apple and Epic Games. Epic Games accused Apple of monopoly because the company demanded developers to only use their way of in-app transactions, which is subject to a 15% fee (Leswing, 2021). Epic Games tried to implement its payment system, and Apple deleted its apps from the App store in response. This was the reason for Epic Games to initiate the lawsuit. Despite the law being on Apples side, this situation showed that developers can use their own systems of in-app transactions that are not taxed by the distributor (Malcolm, 2021). If a big company like Epic Games decided to be decisive in getting rid of that fee, it is hard to imagine how crucial the impact is for smaller companies.
Apple and Google are companies that make billions, and there is no need for them to take this much from small developers. Besides, Google initially promised that the distribution of apps on Play Market will be free, which is not the case currently. Their policy changed over the years, and there is no logical basis for these changes. The resources these companies spend on distributing apps are almost negligible compared to their income, and these fees for sales and in-app purchases could have been way lower. The fee of 5% would still be profitable for Apple and Google and help developers grow faster and make the market more concurrent and saturated with content. This would result in benefits for Apple and Google as well because creators would be able to provide the platforms with more content.
Apple and Google should reduce the fees for developers as they have many negative effects on the market. These include the issues that creators have to face because of the production costs and the saturation of the market with different content. The distribution does not require much from the stores, yet they demand a fee of 15%, which is a significant piece of income for developers who have many production costs and need to provide their teams with finances for a living. Therefore, the fee should be significantly reduced, as in other case, the beginning teams of developers will keep facing these issues that do not allow them to grow.
References
Leswing, K. (2020). Apple will cut App Store commissions by half to 15% for small app makers. CNBC.
Leswing, K. (2021). Google cuts app store fees for developers on first million in annual sales. CNBC.
Malcolm, O. (2022). Epic Games vs Apple trial, verdict, and aftermath all you need to know. AppleInsider.
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