According to Sensor Tower’s latest report, neither Apple nor Google will lose much revenue due to changes in application charging methods. Epic Games CEO, Tim Sweeney, agrees with Sensor Tower and calls the price reduction a “selfish trick”, This report was released after Google announced on Tuesday that it would change its charging method for apps. Apple also took similar measures in December.
Starting from July 1st, Android apps sold through the Google Play app store will only need to pay a 15% commission. This is only active when the sales do not exceed $1 million. After more than $1 million, it will require a 30% commission. Apple’s model is similar: from January 1st, smaller companies can apply for a 15% fee reduction from Apple. However, when the App Store’s sales exceed $1 million, the commission rate will rise to 30%.
According to Sensor Tower, due to the large scale of the app store business of the two companies, the fee reduction will not have a significant impact on their revenue:
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Sensor Tower believes that Apple & Google are still the biggest winners
-If Google implements a 15% commission policy of no more than $1 million for Google Play in 2020, the company will reduce its revenue by $587 million. According to Sensor Tower, this will only take away 5% of its annual revenue.
-If Apple implements a fee reduction policy in 2020, Sensor Tower estimates that the company will lose $595 million in revenue. According to Sensor Tower, this will only take away 2.7% of its annual revenue.
Sensor Tower’s calculations highlight the “winner takes all” situation in the mobile application industry. The fee reduction policies of the Apple Store and Play Store benefit a large number of smaller app developers. However, the companies from which Apple and Google get most of their revenue will still pay 30% commission.
This is the point raised by Epic Games CEO, Tim Sweeney, in response to Google’s policy on Tuesday. Epic Games is currently suing Apple and Google, hoping that these two companies can adjust their app store commission rules.
Sweeney said in a tweet: “This is entirely for their own interests: the vast majority of developers can enjoy the latest 15% discount rate, so the willingness to continue to defend their rights will be reduced. Most of their revenues come from companies that will pay 30%“.
The app stores of Apple and Google are facing increasing attention from legislators and regulators.
A legislative proposal in North Dakota requires app stores to allow software developers to use their own payment processing software. This will allow developers to avoid Apple and Google charging fees. But the proposal failed to pass. But last week, the Arizona House of Representatives passed a similar bill. This bill is still awaiting deliberation by the state Senate.