Google undercuts Apple with new 15% revenue share for certain Play apps

This comes only a few months after a similar announcement by Apple.

Read the whole story

 

[Abhi Beckert]

Spotify takes about a 30% margin on a premium account, but that needs to fund all their marketing and advertising, research, customer growth, etc all in one. They need to do a fair bit of work delivering stuff to the user.

Last I checked, Google and Apple both have very large R&D budgets. A lot larger than Spotify in fact.

These are all publicly traded companies with extensive reporting requirements. Go look up their actual profit margins and compare to other companies if you're going to claim profit margins are too high. Here's a few:

- Apple 35%
- Google 19%
- Spotify 25%
- Microsoft 27%

Operating margin and gross margin are not the same thing. For example, Spotify's gross margin of 25% does not take into account R&D costs, it's just revenue less payments cost of goods (i.e music licensing), whereas Google's operating margin of 19% does. If you take Google's revenue less cost of revenue, their gross margin is well over 50% (source: 2020Q4 earnings release, page 5) but even that isn't apples to apples.

But if you were to take the google store as a stand alone product (which was what I was saying), it would incur very little cost compared to any other online retailer of products. Therefore taking the same margins is a lot harder to justify.

And if you take Android as a standalone product, it has zero revenue and billions in expenses. Other services like the Play Store and Google Search Ads pay for Android.

 

[BullBearMS]

Spotify takes about a 30% margin on a premium account, but that needs to fund all their marketing and advertising, research, customer growth, etc all in one. They need to do a fair bit of work delivering stuff to the user.

Last I checked, Google and Apple both have very large R&D budgets. A lot larger than Spotify in fact.

These are all publicly traded companies with extensive reporting requirements. Go look up their actual profit margins and compare to other companies if you're going to claim profit margins are too high. Here's a few:

- Apple 35%
- Google 19%
- Spotify 25%
- Microsoft 27%

Operating margin and gross margin are not the same thing. For example, Spotify's gross margin of 25% does not take into account R&D costs, it's just revenue less payments cost of goods (i.e music licensing), whereas Google's operating margin of 19% does. If you take Google's revenue less cost of revenue, their gross margin is well over 50% (source: 2020Q4 earnings release, page 5) but even that isn't apples to apples.

But if you were to take the google store as a stand alone product (which was what I was saying), it would incur very little cost compared to any other online retailer of products. Therefore taking the same margins is a lot harder to justify.

And if you take Android as a standalone product, it has zero revenue and billions in expenses. Other services like the Play Store and Google Search Ads pay for Android.

Advertising is pretty much the only profitable thing Google does. The rest of the company basically takes large piles of money and sets them on fire, especially the "moonshots".

Not to mention paying a fortune for companies like Nest, only to let them rot.

 

[ilidd]

Whatever Apple does their competitors follow. That should tell you how great a company Apple is. About time Google.

Yeah, um. about that. Last I checked Apple didn't automatically give you the 15% rate - they had to put you in it.

Besides that, Google never mandated you use their payment system for most apps while Apple mandated it for more categories, and Google did not prohibit them from telling people of alternative payment methods. Apple forbids it.

Not to mention the 15% thing on apple's end is expressly for subscription based stuff and only if the person is with that subscription for a year.

That’s a different 15% revenue program.

 

[ilidd]

So Google taxes the way progressive taxation actually works, but Apple taxes based on how your average Joe thinks progressive taxation works.

Yep, I roll my eyes whenever someone posts the urban myth about how they got a salary increase but "lost money because of the tax increase." Marginal tax rates don't work that way!

(It is true that some low-income people can be hurt by suddenly crossing over a threshold where they make "too much" to keep getting some form of assistance like food or housing aid.)

When I was younger, I believed it because a manager told me that during a salary adjustment. He was “doing [me] a favor” by not putting me into the next tax bracket where I’d make less overall.

Now older and wiser, I think he just wanted me to not get paid as much.

 

[johnsonwax]

Seriously, small time hobbyist developers on both platforms should have the fee waived entirely on sales less than $10 000/year, and only pay the credit card processing fees.

They do.

Hobby means 'not for pay'.
Professional means 'for pay'. Literally.

All of these platforms charge you nothing for free apps. If you are charging - you are not a hobbyist.

 

[Fatesrider]

Whatever Apple does their competitors follow. That should tell you how great a company Apple is. About time Google.

Yeah, um. about that. Last I checked Apple didn't automatically give you the 15% rate - they had to put you in it.

Besides that, Google never mandated you use their payment system for most apps while Apple mandated it for more categories, and Google did not prohibit them from telling people of alternative payment methods. Apple forbids it.

Assuming for the moment that both companies are trying to maneuver their respective corporate ships to minimize the damage from an impending collision with Congress, the FTC, the DoJ or all three over anti-trust violations, I'd have to say that Google is better positioned to defend itself against Play Store issues much more than Apple is against violations being done by the Apple Store.

And that's for all the differences in their approaches to their stores you listed above, in addition to Apple's disturbing tendency to pull certs (so apps don't work at all regardless of where they were distributed) for companies who are non-compliant with their rules.

Google may ban an app from its Play Store, but the same app can still be obtained from a third party vendor.

Apple?

Not a chance, since they don't do third party vendors in the first place, and punish those who try.

 

[johnsonwax]

Wait. So, a developer on Apple’s store who earns $1,000,001 in revenue only takes home $700,000.70, but a developer who earns $999,999 takes home $849,999.85? That’s an expensive extra couple dollars in revenue.

I don't think that is quite correct.

https://developer.apple.com/app-store/s ... s-program/

1. Existing developers who made up to 1 million USD in proceeds in 2020 for all their apps, as well as developers new to the App Store, can qualify for the program and the reduced commission.
2. If a participating developer surpasses the 1 million USD threshold, the standard commission rate will apply for the remainder of the year.

From that wording, it sounds like the first $1M has a 15% cut and then subsequent earnings has the standard 30% cut. Then next year, the developer is kicked out of the program and all of their earnings has the 30% cut. But if the developer earnings falls below $1M again, they can then apply to be reinstated to the program again the following year. It's convoluted as hell so I don't see why Apple decided to go that route unless they really want to squeeze that extra bit of commission out of their devs.

Google has a partial refund function, does Apple? If I'm a dev that is about to hit the $1M threshold in the last few days of the year, I would be refunding the heck out of those last few orders!

Apple and Google's are effectively identical. There might be some small differences at the margins, but everyone has less than $1M in revenue before they reach $1M and so they get 85%, and once they hit $1M they get 70%. Apple's program is not retroactive. Not sure about Google's.

 

[jdale]

Wait. So, a developer on Apple’s store who earns $1,000,001 in revenue only takes home $700,000.70, but a developer who earns $999,999 takes home $849,999.85? That’s an expensive extra couple dollars in revenue.

I don't think that is quite correct.

https://developer.apple.com/app-store/s ... s-program/

1. Existing developers who made up to 1 million USD in proceeds in 2020 for all their apps, as well as developers new to the App Store, can qualify for the program and the reduced commission.
2. If a participating developer surpasses the 1 million USD threshold, the standard commission rate will apply for the remainder of the year.

From that wording, it sounds like the first $1M has a 15% cut and then subsequent earnings has the standard 30% cut. Then next year, the developer is kicked out of the program and all of their earnings has the 30% cut. But if the developer earnings falls below $1M again, they can then apply to be reinstated to the program again the following year. It's convoluted as hell so I don't see why Apple decided to go that route unless they really want to squeeze that extra bit of commission out of their devs.

Google has a partial refund function, does Apple? If I'm a dev that is about to hit the $1M threshold in the last few days of the year, I would be refunding the heck out of those last few orders!

Apple and Google's are effectively identical. There might be some small differences at the margins, but everyone has less than $1M in revenue before they reach $1M and so they get 85%, and once they hit $1M they get 70%. Apple's program is not retroactive. Not sure about Google's.

They are effectively identical in the first year. In the first year, both Google and Apple charge 15% until they hit $1M, and 30% thereafter.

In the second year, Google charges 15% on the first $1M. But Apple charges 30% immediately.

If, in the second year, you make less than $1M in Apple's store, they'll drop you down to 15% in year three and you are back where you started. But you made a lot less in year two.

Here's Apple's words from that link https://developer.apple.com/app-store/s ... s-program/ with emphasis and percentages added for clarity:

* Existing developers who made up to 1 million USD in proceeds in 2020 for all their apps, as well as developers new to the App Store, can qualify for the program and the reduced commission. {15%}
* If a participating developer surpasses the 1 million USD threshold, the standard commission rate {30%} will apply to future sales.
* If a developer’s proceeds fall below the 1 million USD threshold in a future calendar year, they can re-qualify for the 15% commission the year after.


The way they wrote this is confusing, the rule is overcomplicated, and it doesn't help that they say "standard commission" and "reduced commission" instead of spelling it out. Google's version is a lot more clear, and a lot more generous since many apps will make most of their money early on rather than continuing to rake in millions in year two.

 

[mikeschr]

Seriously, small time hobbyist developers on both platforms should have the fee waived entirely on sales less than $10 000/year, and only pay the credit card processing fees.

They do.

Hobby means 'not for pay'.
Professional means 'for pay'. Literally.

All of these platforms charge you nothing for free apps. If you are charging - you are not a hobbyist.

From a tax point of view in the U.S., you can definitely be making money from a "hobby". If you have income from an enterprise that's not run as a for-profit business - usually not too much income - it's reported as hobby income.

 

[Don Reba]

snip

 

[paradox00]

And now that both Apple and Google have moved the goalposts, it turns out that 15% isn't acceptable either.

>“While a reduction in the Google app tax may alleviate a small part of the financial burden developers have been shouldering, this does not address the root of the issue,” an Epic Games representative said in a statement. “Whether it’s 15% or 30%, for apps obtained through the Google Play Store, developers are forced to use Google’s in-app payment services.”

https://www.cnbc.com/2021/03/16/google- ... sales.html

Nor should it be. What is needed is a market driven mechanism for establishing fair app store pricing which can only be provided by allowing for alternative app stores on each platform.

This exists on Android today. Right now.

That's not what Epic says.

>“After 18 months of operating Fortnite on Android outside of the Google Play Store, we’ve come to a basic realization,” reads Epic’s statement. “Google puts software downloadable outside of Google Play at a disadvantage, through technical and business measures such as scary, repetitive security pop-ups for downloaded and updated software, restrictive manufacturer and carrier agreements and dealings, Google public relations characterizing third party software sources as malware, and new efforts such as Google Play Protect to outright block software obtained outside the Google Play store.”

https://www.theverge.com/2020/4/21/2122 ... y-software

I don't use Android but haven't users in the previous threads on this issue pointed out Epic are being a bit disingenuous with their complaints over the security warning and steps required to turn on side-loading.

With side-loading enable through a couple of steps instead of the long winded way Epic claimed?

According to other users the warnings aren't much different than the UAC/SmartScreen warnings in Windows 10.

Also Google's warnings were proven correct when it was found that the Epic Android Launcher had security holes in it:
https://www.cnet.com/news/just-as-criti ... rity-risk/

They'd obviously play up side-loading to make their case. I don't think that's really disingenuous. The playing filed is not level (but maybe it doesn't have to be perfectly level anyway, as there is some validity to the security arguments).

Frankly the bigger problem is that Google allegedly blocked handset makers (LG and OnePlus) from making deals with Epic to have their launcher pre-installed by wielding Google Play terms and conditions against the manufacturers. I'm anti-bloatware in general, but Google isn't the gatekeeper of that. Having the Play Store pre-installed and blocking other stores (from doing the same) that might compete against it it is extremely monopolistic.

https://www.theverge.com/2020/8/13/2136 ... lawsuit-lg

 

[BullBearMS]

And now that both Apple and Google have moved the goalposts, it turns out that 15% isn't acceptable either.

>“While a reduction in the Google app tax may alleviate a small part of the financial burden developers have been shouldering, this does not address the root of the issue,” an Epic Games representative said in a statement. “Whether it’s 15% or 30%, for apps obtained through the Google Play Store, developers are forced to use Google’s in-app payment services.”

https://www.cnbc.com/2021/03/16/google- ... sales.html

Nor should it be. What is needed is a market driven mechanism for establishing fair app store pricing which can only be provided by allowing for alternative app stores on each platform.

This exists on Android today. Right now.

That's not what Epic says.

>“After 18 months of operating Fortnite on Android outside of the Google Play Store, we’ve come to a basic realization,” reads Epic’s statement. “Google puts software downloadable outside of Google Play at a disadvantage, through technical and business measures such as scary, repetitive security pop-ups for downloaded and updated software, restrictive manufacturer and carrier agreements and dealings, Google public relations characterizing third party software sources as malware, and new efforts such as Google Play Protect to outright block software obtained outside the Google Play store.”

https://www.theverge.com/2020/4/21/2122 ... y-software

I don't use Android but haven't users in the previous threads on this issue pointed out Epic are being a bit disingenuous with their complaints over the security warning and steps required to turn on side-loading.

With side-loading enable through a couple of steps instead of the long winded way Epic claimed?

According to other users the warnings aren't much different than the UAC/SmartScreen warnings in Windows 10.

Also Google's warnings were proven correct when it was found that the Epic Android Launcher had security holes in it:
https://www.cnet.com/news/just-as-criti ... rity-risk/

They'd obviously play up side-loading to make their case. I don't think that's really disingenuous. The playing filed is not level (but maybe it doesn't have to be perfectly level anyway, as there is some validity to the security arguments).

Frankly the bigger problem is that Google allegedly blocked handset makers (LG and OnePlus) from making deals with Epic to have their launcher pre-installed by wielding Google Play terms and conditions against the manufacturers. I'm anti-bloatware in general, but Google isn't the gatekeeper of that. Having the Play Store pre-installed and blocking other stores (from doing the same) that might compete against it it is extremely monopolistic.

https://www.theverge.com/2020/8/13/2136 ... lawsuit-lg

Not to mention the part where Google really ramped up those warnings and restrictions when Fortnight, the biggest money making game on the platform, just so happened to have just stopped giving Google a cut through the Play Store.

 

[mrochester]

Spotify takes about a 30% margin on a premium account, but that needs to fund all their marketing and advertising, research, customer growth, etc all in one. They need to do a fair bit of work delivering stuff to the user.

Last I checked, Google and Apple both have very large R&D budgets. A lot larger than Spotify in fact.

These are all publicly traded companies with extensive reporting requirements. Go look up their actual profit margins and compare to other companies if you're going to claim profit margins are too high. Here's a few:

- Apple 35%
- Google 19%
- Spotify 25%
- Microsoft 27%

Operating margin and gross margin are not the same thing. For example, Spotify's gross margin of 25% does not take into account R&D costs, it's just revenue less payments cost of goods (i.e music licensing), whereas Google's operating margin of 19% does. If you take Google's revenue less cost of revenue, their gross margin is well over 50% (source: 2020Q4 earnings release, page 5) but even that isn't apples to apples.

But if you were to take the google store as a stand alone product (which was what I was saying), it would incur very little cost compared to any other online retailer of products. Therefore taking the same margins is a lot harder to justify.

And if you take Android as a standalone product, it has zero revenue and billions in expenses. Other services like the Play Store and Google Search Ads pay for Android.

This is why I have always seen Google’s business model as inherently anti-competitive. Anyone trying to compete in the smartphone operating system market has to be able to afford to sell their product for nothing to be able to compete with google giving away android.

 

[The Wonderful Wizard]

Google sees the regulatory scrutiny Apple is currently getting and knows that given their own current monopoly/anticompetitive investigations they will likely soon be getting it as bad or worse. This is just an attempt to deflect or soften the blow before the hammer strikes them on this particular nail. They want to say "look we're much nicer than that other mean company, so we couldn't possibly be abusing our position". I have low expectations that this strategy will pay off much in the end

Also the Australian and EU competition agencies were muttering about how everyone charging 30% regardless of their costs didn’t look like they were trying very hard to compete. In Australia they gave a formal “please explain why what you’re doing is legal”, while in Europe it was just a “we’re thinking about starting to do something about investigating” but that’s better than nothing

 

[jeremyp66]

Fixed 15% for the first million, like a marginal tax rate, makes so much more sense.

You shouldn't be put into a position where you're better off tanking sales at $950,000 rather than risk going over a million and doubling what you owe.

It sounds to me like it would be worse than that. If Apple takes its 15% as you earn (i.e. every time somebody pays you a dollar, you get 85 cents and Apple gets 15 cents), then at $999,999.99 you owe Apple nothing because you've already paid, but at $1,000,000.01 you owe Apple $150k

 

[johnsonwax]

Wait. So, a developer on Apple’s store who earns $1,000,001 in revenue only takes home $700,000.70, but a developer who earns $999,999 takes home $849,999.85? That’s an expensive extra couple dollars in revenue.

I don't think that is quite correct.

https://developer.apple.com/app-store/s ... s-program/

1. Existing developers who made up to 1 million USD in proceeds in 2020 for all their apps, as well as developers new to the App Store, can qualify for the program and the reduced commission.
2. If a participating developer surpasses the 1 million USD threshold, the standard commission rate will apply for the remainder of the year.

From that wording, it sounds like the first $1M has a 15% cut and then subsequent earnings has the standard 30% cut. Then next year, the developer is kicked out of the program and all of their earnings has the 30% cut. But if the developer earnings falls below $1M again, they can then apply to be reinstated to the program again the following year. It's convoluted as hell so I don't see why Apple decided to go that route unless they really want to squeeze that extra bit of commission out of their devs.

Google has a partial refund function, does Apple? If I'm a dev that is about to hit the $1M threshold in the last few days of the year, I would be refunding the heck out of those last few orders!

Apple and Google's are effectively identical. There might be some small differences at the margins, but everyone has less than $1M in revenue before they reach $1M and so they get 85%, and once they hit $1M they get 70%. Apple's program is not retroactive. Not sure about Google's.

They are effectively identical in the first year. In the first year, both Google and Apple charge 15% until they hit $1M, and 30% thereafter.

In the second year, Google charges 15% on the first $1M. But Apple charges 30% immediately.

If, in the second year, you make less than $1M in Apple's store, they'll drop you down to 15% in year three and you are back where you started. But you made a lot less in year two.

Here's Apple's words from that link https://developer.apple.com/app-store/s ... s-program/ with emphasis and percentages added for clarity:

* Existing developers who made up to 1 million USD in proceeds in 2020 for all their apps, as well as developers new to the App Store, can qualify for the program and the reduced commission. {15%}
* If a participating developer surpasses the 1 million USD threshold, the standard commission rate {30%} will apply to future sales.
* If a developer’s proceeds fall below the 1 million USD threshold in a future calendar year, they can re-qualify for the 15% commission the year after.


The way they wrote this is confusing, the rule is overcomplicated, and it doesn't help that they say "standard commission" and "reduced commission" instead of spelling it out. Google's version is a lot more clear, and a lot more generous since many apps will make most of their money early on rather than continuing to rake in millions in year two.

Ah, yes, that is materially different. But that also seems inherently unstable because you're potentially incentivizing a developer to defer a sale from Dec to Jan. I'm not exactly sure how, but I'd expect that to be abused and gamified to a degree that Google has to modify it.

 

[johnsonwax]

Wait. So, a developer on Apple’s store who earns $1,000,001 in revenue only takes home $700,000.70, but a developer who earns $999,999 takes home $849,999.85? That’s an expensive extra couple dollars in revenue.

No. It's marginal. You get $0.85 of every dollar through the first million in revenue and then $0.70 on every dollar after. I personal know a developer who has confirmed that with Apple and qualified for the 15% rate. The improved rate is not retroactive (they won't mail you a check for what you would have earned if this was in place 5 years ago) but you never need to give dollars to Apple. Once you cross the million, the rate simply changes for every subsequent dollar.

 

[johnsonwax]

From a tax point of view in the U.S., you can definitely be making money from a "hobby". If you have income from an enterprise that's not run as a for-profit business - usually not too much income - it's reported as hobby income.

We're not talking IRS rules here. I'm trying to avoid a shifting argument like we see with the estate tax where 'family farms' got inserted into an issue regarding capital gains taxation because it could be played in a sympathetic way. Apple called the AppleTV 'just a hobby' that happens to earn a few billion dollars a year.

If your product is in Walmart, it's not a hobby, it's a business. If it's in a little cardboard stand on the corner near your house, at the church flea market, etc. it probably is a hobby. Apple has a clear line - free is probably a hobby, paid is a business. If you don't want to give Apple 15%, put it up for free and set up a Patreon. Or deploy it as a web app and do whatever you want.

 

[sxotty]

I think Google is safe since puerile can use other stores. This is nice though. In some ways these changes are a bummer since they make shoddy business practices more likely to continue.

 

[jbeshir]

Wait. So, a developer on Apple’s store who earns $1,000,001 in revenue only takes home $700,000.70, but a developer who earns $999,999 takes home $849,999.85? That’s an expensive extra couple dollars in revenue.

No. It's marginal. You get $0.85 of every dollar through the first million in revenue and then $0.70 on every dollar after. I personal know a developer who has confirmed that with Apple and qualified for the 15% rate. The improved rate is not retroactive (they won't mail you a check for what you would have earned if this was in place 5 years ago) but you never need to give dollars to Apple. Once you cross the million, the rate simply changes for every subsequent dollar.

Worth noting this is only true within the first year; if you hit the $0.70 on the dollar threshold during the first year you're kicked out of the programme and pay $0.70 from day one the second.

This is slightly more complicated than your take home within the same year dropping because they suddenly bill your account $150k, but has similar effect in the long run- you just pay in increased fees the next year instead of immediately. If you make exactly $999,999 every year you get ~$850k every year, if you make exactly $1,000,001 every year your lost eligibility for the programme means you get $700k every year. So "expensive couple of dollars" indeed.

 

[mariupolo]

Spotify takes about a 30% margin on a premium account, but that needs to fund all their marketing and advertising, research, customer growth, etc all in one. They need to do a fair bit of work delivering stuff to the user.

Last I checked, Google and Apple both have very large R&D budgets. A lot larger than Spotify in fact.

These are all publicly traded companies with extensive reporting requirements. Go look up their actual profit margins and compare to other companies if you're going to claim profit margins are too high. Here's a few:

- Apple 35%
- Google 19%
- Spotify 25%
- Microsoft 27%

Operating margin and gross margin are not the same thing. For example, Spotify's gross margin of 25% does not take into account R&D costs, it's just revenue less payments cost of goods (i.e music licensing), whereas Google's operating margin of 19% does. If you take Google's revenue less cost of revenue, their gross margin is well over 50% (source: 2020Q4 earnings release, page 5) but even that isn't apples to apples.

But if you were to take the google store as a stand alone product (which was what I was saying), it would incur very little cost compared to any other online retailer of products. Therefore taking the same margins is a lot harder to justify.

And if you take Android as a standalone product, it has zero revenue and billions in expenses. Other services like the Play Store and Google Search Ads pay for Android.

Android is free* because it provides Google, directly and indirectly, with user data that helps them sell ads and make money, not because it drives Google Play sales. It's not the console business model.

*Actually, Google charges OEMs a fee for devices sold in the EU that come with Google Play and Google apps, I believe, as a result of an antitrust ruling, but this is besides the point.

 

[logic_88]

The way they wrote this is confusing, the rule is overcomplicated, and it doesn't help that they say "standard commission" and "reduced commission" instead of spelling it out. Google's version is a lot more clear, and a lot more generous since many apps will make most of their money early on rather than continuing to rake in millions in year two.

Yeah, it's confusing enough that the author of the article got it wrong.

That's because Apple applies its lower 15 percent rate to a developer until that developer exceeds $1 million in revenue in a given year, at which point the higher 30 percent number is applied to all of that developer's earnings. Google still charges 15 percent on that first million even if the developer makes $5 million. So in Google's model, a developer who earns $1.2 million on an app pays 15 percent on $1 million, then 30 percent on $200,000. In Apple's, a developer making $800,000 forks over 15 percent on that amount, but if they make $1.2 million, they pay 30 percent on all $1.2 million, not just $200,000.

 

[Tridus]

"Arguably"? Seriously? There's nothing arguable about it: one is mathematically superior to the other. In Apple's system, if you go from $999,999 of revenue to $1,000,001 of revenue, you will *lose* money. In Google's, you won't.

Some impressive spin the author is trying to put on it by claiming this is at all debatable.

 

[zack_zzz]

Apple has frankly chosen a rather bizarre way of calculating fees.

After their fee, someone who earns approximately 823,500 USD in sales is in the same place as someone who earns 1,000,000 USD. That isn't an insignificant difference.

Surely app developers or publishers would consider pulling their software from the App store as they close in on 1,000,000 USD, unless they are reasonably confident that they will earn enough to make it worthwhile.

 

[solomonrex]

Fixed 15% for the first million, like a marginal tax rate, makes so much more sense.

You shouldn't be put into a position where you're better off tanking sales at $950,000 rather than risk going over a million and doubling what you owe.

This is all true, but as an iOS developer it’s not a big consideration. I’m way more thrilled with the 15%, which is a hella deal given all the benefits.

And if I get to $1M I’ll be happy to pay the 30%.

you seem to forget that along the way, you'll also be making $950k, $900k, $850k, which will give you higher take-home revenue after Apple gets its cut, then when you're making $1m

Apple is creating a bizarre incentive to keep your revenue under $1m unless you blast through the threshold.

Again, you are right but this is the most first world of first world problems. What will probably happen is devs heading for borderline $1M years will try to move their last sales into the next year to blast through then. Basically turn off ads the last month to squeeze under, then roll the savings into first quarter of next year to ramp sales.

We're talking about $150,000. That's well beyond first world problems. That's the annual salary of 1 to 3 well-paid staff (depending on skill level, experience, local cost of living, etc.).

??

Whatever you think wages are, double that for actual cost to an employer.

It's a global app store and he gave it a range of 1 to 3 employees. I think that's solid analysis. Even Google and Apple hire a ton of contractors at low wage rates. This isn't the Detroit 3 anymore, and the Indian economy isn't built on local union jobs.

 

[entropy_wins]

Fixed 15% for the first million, like a marginal tax rate, makes so much more sense.

You shouldn't be put into a position where you're better off tanking sales at $950,000 rather than risk going over a million and doubling what you owe.

This is all true, but as an iOS developer it’s not a big consideration. I’m way more thrilled with the 15%, which is a hella deal given all the benefits.

And if I get to $1M I’ll be happy to pay the 30%.

you seem to forget that along the way, you'll also be making $950k, $900k, $850k, which will give you higher take-home revenue after Apple gets its cut, then when you're making $1m

Apple is creating a bizarre incentive to keep your revenue under $1m unless you blast through the threshold.

Again, you are right but this is the most first world of first world problems. What will probably happen is devs heading for borderline $1M years will try to move their last sales into the next year to blast through then. Basically turn off ads the last month to squeeze under, then roll the savings into first quarter of next year to ramp sales.

We're talking about $150,000. That's well beyond first world problems. That's the annual salary of 1 to 3 well-paid staff (depending on skill level, experience, local cost of living, etc.).

??

Whatever you think wages are, double that for actual cost to an employer.

And that lovely word "overhead" (looks up), can be >%200 depending on the business...

S

 

[Nalyd]

Apple should simplify their structure, but are we all arguing about an edge case here? How many apps end the year just right around a million? Vs the enormous number that make far less than that, and the ones that blast way past it?

Also, this is competition among the stores across platforms. For developers, but in principle for users if devs pass along the cost savings.

Also, a proliferation of garbage stores with root access across both platforms is not a win for consumers.

Finally, unlike with Google, no one ever has to interact with Apple if they don’t buy their hardware, and there is plenty of competing hardware. So the monopoly status is rather different between the two.

 

[Aguyd]

Google sees the regulatory scrutiny Apple is currently getting and knows that given their own current monopoly/anticompetitive investigations they will likely soon be getting it as bad or worse. This is just an attempt to deflect or soften the blow before the hammer strikes them on this particular nail. They want to say "look we're much nicer than that other mean company, so we couldn't possibly be abusing our position". I have low expectations that this strategy will pay off much in the end

Unlike Apple, Google does allow apps to be sideloaded. As Amazon and Samsung have both demonstrated, it's possible to set up a competing store (though Google's treatment of such stores can easily be interpreted as anti-competitive).

In the context of mobile, I think Apple is far more vulnerable to regulatory scrutiny than Google.

 

[PrionDX]

So Google taxes the way progressive taxation actually works, but Apple taxes based on how your average Joe thinks progressive taxation works.

Yep, I roll my eyes whenever someone posts the urban myth about how they got a salary increase but "lost money because of the tax increase." Marginal tax rates don't work that way!

(It is true that some low-income people can be hurt by suddenly crossing over a threshold where they make "too much" to keep getting some form of assistance like food or housing aid.)

Or something like the Children's Health Insurance Program, which has a hard income limit as well and potentially very expensive consequences in money and healthcare outcomes.

 

[Hopefully Smarter]

Sorry. Won't buy anything outside of the platforms' respective app stores.

 

[janhec]

Fixed 15% for the first million, like a marginal tax rate, makes so much more sense.

You shouldn't be put into a position where you're better off tanking sales at $950,000 rather than risk going over a million and doubling what you owe.

This is all true, but as an iOS developer it’s not a big consideration. I’m way more thrilled with the 15%, which is a hella deal given all the benefits.

And if I get to $1M I’ll be happy to pay the 30%.

No, you won't; you are just sure you are never going to get to $ 1M.

 

[DavidMarkMadison]

To address just the basic headline of this article: What google charges its developers compared to what Apple charges, is largely irrelevant. It may influence a smaller development shop to use google as the initial platform and port to Apple, instead of vice versa, but any development shop or person that decides to only support Google OR Apple is leaving money on the table, no matter how you view it.

From a "mom and pop" should pay no fees, sorry, no. Maybe 30% is too much, not sure. Developers get an awful lot for that 30%, and if you do not think so, try hosting your own application store, garnishing interest in it enough that literally millions of potential customers visit YOUR application store every day, and see how much that costs.

As far as the over/under on the 30%/15%, google's does seem to be a more logical approach, if indeed Apple's is how the artical describes it, and perhaps Google doing it first will convince Apple to follow suit. However, instead of looking at it as "above the threadhhold and below the threshhold", look at it as below the threshhold reduction in the cut. The idea is to give shops a break so they can re-invest and grow. At $1M, I'd say that company has established itself, and although there could be a window of pain at the over/under (as I said, Google's approach seems better defined), push past that and continue to grow.

 

[Photon_plumber]

Whatever Apple does their competitors follow.

I don't think there is any danger of Google copying the part where Apple has it's devices ask users if they want to allow tracking when an app tries to track them.

That was brutal.

 

[gijames1225]

And now that both Apple and Google have moved the goalposts, it turns out that 15% isn't acceptable either.

>“While a reduction in the Google app tax may alleviate a small part of the financial burden developers have been shouldering, this does not address the root of the issue,” an Epic Games representative said in a statement. “Whether it’s 15% or 30%, for apps obtained through the Google Play Store, developers are forced to use Google’s in-app payment services.”

https://www.cnbc.com/2021/03/16/google- ... sales.html

Epic complaining about the 30% Cut Apple and Google take was always a misdirect.

In the email that Sweeney set to Apple (and most likely sent a copy/paste version to Google considering the Apple one incorrectly references Android- has their actually been any movement on their lawsuit against Google?) he wasn't asking for a lower store cut he was demanding the removal of the store cut.

The emails are discussed on page 5 of the court transcript:
https://www.courtlistener.com/recap/gov ... .118.0.pdf

The actual email is here:
https://cdn.vox-cdn.com/uploads/chorus_ ... emails.pdf

So even a 1% store cut would be unacceptable to Epic.

Epic's end goal doesn't seem to be to get a lower store cut but instead they want to force a version of the Epic Games Store onto Mobiles so they get to be the gatekeepers (where apparently it's fine for them to charge a 12% store cut) they also seem to be unhappy that Google and Apple limit the kind of data they can obtain from users, hence their other demand that their store also gets root level access to a users device.

I'm amazed at Epic's ability to be in comparison with any company other than Enron and be the obvious asshole of the pair.

It's appalling that they see these two companies that built massive, successful ecosystems based on investment and engineering prowess, and Epic / Sweeney just hope to sue their way into a slice of the proceedings.

I don't think they have a leg to stand on against Google though, you can sideload to your hearts content and install alternative app stores just fine on Android.

 

[abazigal]

Apple has frankly chosen a rather bizarre way of calculating fees.

After their fee, someone who earns approximately 823,500 USD in sales is in the same place as someone who earns 1,000,000 USD. That isn't an insignificant difference.

Surely app developers or publishers would consider pulling their software from the App store as they close in on 1,000,000 USD, unless they are reasonably confident that they will earn enough to make it worthwhile.

I suspect Apple has enough data to show (and know) that there are only a small number of developers whose annual revenue hover around this range to actually be of concern.

For the rest, they are either earning well below the million-dollar mark, or way above this threshold, that there is no incentive for them to try and game the system in such a manner.

 

[Ion_Quest]

A decade ago, when Apple started treating software Partners-Like-Puppets I tried to warn young devs to keep eyes open. Myself with a Mac-only game I looked around for alternative distribution. All the big boys where charging exactly 30% -- highway robbery. I dumped Apple and my entire customer base along with them! I mentioned the word Collusion but some disagreed. Cheerio

 

[Jeff S]

Fixed 15% for the first million, like a marginal tax rate, makes so much more sense.

You shouldn't be put into a position where you're better off tanking sales at $950,000 rather than risk going over a million and doubling what you owe.

This is all true, but as an iOS developer it’s not a big consideration. I’m way more thrilled with the 15%, which is a hella deal given all the benefits.

And if I get to $1M I’ll be happy to pay the 30%.

Although, I don't exactly understand how this works, but from the article, it sounds like if you are selling on the Apple App Store, you can potentially be liable for a big unexpected bill the second you hit $1M, and that would kind of suck?

Like, I think Apple just takes the %15 cut as it goes along. So, you could be a developer, and happily making revenue, and you're at 999,99 of total sales, of which Apple has paid out to you $844,999. You are small, so you didn't think or were just unable to put some money in the bank, but instead, are using it to hire developers, pay for cloud hosting fees, marketing, etc.

You hit one million dollars, and suddenly, Apple sends you a bill for another $150,000. Now you're screwed. Ok, so that means you have to plan ahead if you are getting anywhere close to $1M in revenue, and save $150k in the bank to pay that Apple bill when you hit the magic cliff of $1M of revenue.

But if you don't end up hitting $1M for the year, you now have maybe a bit less than $150k you *could* have spent earlier on marketing, devs or whatever. Of course, saving money in the bank and having it left over at the end of the year isn't the worst problem to have, but that level of uncertainty must kind of suck, because of the time value of money. Money invested today can yield ROI in the future, whereas if it's sitting in the bank, it's not working for you.

Meanwhile, someone in the Google developer program can rest assured that they won't have any bills due when they hit $1M in revenue - Google will just increase their take on future revenue, and you get an extra $150k on the first million.

I'm not saying Apple is doing anything wrong. But Google's approach is definitely more friendly to small business startups.

 

[graylshaped]

This is all true, but as an iOS developer it’s not a big consideration. I’m way more thrilled with the 15%, which is a hella deal given all the benefits.

And if I get to $1M I’ll be happy to pay the 30%.

you seem to forget that along the way, you'll also be making $950k, $900k, $850k, which will give you higher take-home revenue after Apple gets its cut, then when you're making $1m

Apple is creating a bizarre incentive to keep your revenue under $1m unless you blast through the threshold.

Again, you are right but this is the most first world of first world problems. What will probably happen is devs heading for borderline $1M years will try to move their last sales into the next year to blast through then. Basically turn off ads the last month to squeeze under, then roll the savings into first quarter of next year to ramp sales.

We're talking about $150,000. That's well beyond first world problems. That's the annual salary of 1 to 3 well-paid staff (depending on skill level, experience, local cost of living, etc.).

??

Whatever you think wages are, double that for actual cost to an employer.

And that lovely word "overhead" (looks up), can be >%200 depending on the business...

S

He clarified to say he was hiring cheap help in a different country. If that was his intent, then his number is fine. Many companies have realized the difficulty of coordinating non-manufacturing work across many time zones actually hampers productivity, and that pushes overhead up, particularly when one realizes in an eight hour day, a company is doing well to get more than four hours of work out of someone.

Which may be why so many projects with "1-3" employees being paid shit take too long and don't work so well.

 

[Jeff S]

A decade ago, when Apple started treating software Partners-Like-Puppets I tried to warn young devs to keep eyes open. Myself with a Mac-only game I looked around for alternative distribution. All the big boys where charging exactly 30% -- highway robbery. I dumped Apple and my entire customer base along with them! I mentioned the word Collusion but some disagreed. Cheerio

Unfortunately, market pricing is legal collusion. That is, while competitors can't get in a room or email thread and say, "Hey, let's fix prices at 30%.", they can just 'follow-the-leader'. When the leader announces their price is 30%, they can just follow suit, or maybe 29.9% just to be technically slightly cheaper, and no one can prove collusion.

 

[Jeff S]

To address just the basic headline of this article: What google charges its developers compared to what Apple charges, is largely irrelevant. It may influence a smaller development shop to use google as the initial platform and port to Apple, instead of vice versa, but any development shop or person that decides to only support Google OR Apple is leaving money on the table, no matter how you view it.

From a "mom and pop" should pay no fees, sorry, no. Maybe 30% is too much, not sure. Developers get an awful lot for that 30%, and if you do not think so, try hosting your own application store, garnishing interest in it enough that literally millions of potential customers visit YOUR application store every day, and see how much that costs.

"Host your own application store" - except, then you wouldn't be able to get onto ios devices. Apple maintain a monopoly of distribution on ios, effectively. So, how is that going to work?