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Execs talked not ‘leaving money on the table’ when setting App Store fee

Emails provide an inside look at Apple’s thought process on App Store fees.

What you need to know

  • Emails from the Epic v. Apple case showcase Apple executive discussions on App Store fees.

As reported by The Verge, emails unveiled in the Epic Games v. Apple lawsuit bring to light the company’s internal feelings on why it takes a 30% cut on App Store transactions. While the fee is standard practice across all App Stores, it also benefited Apple from “leaving money on the table.”

The emails date back to a 2011 discussion, which included Apple software and services leader Eddy Cue, around how Apple would handle subscription video applications on the Apple TV — an important conversation, given the rise in popularity of streaming services. And while the discussion doesn’t offer much insight on Apple’s existing 30 percent fee for the App Store, it does reveal how malleable those rules were when it came to maximizing profit.

Discussions around subscription fees for video applications on the Apple TV eventually landed on sticking to the 30% cut that currently existed on the iTunes and App Store. One executive said that, while they wanted to remain open to other deal structures, they wanted to ensure to protect the 30% fee that had long been the standard in the App Store.

One point of concern for Apple was structuring the new fees in such a way that they didn’t undermine the payment structure it set on the App Store. “I don’t want to do any deals where we get less than 30%. That is what it is on the app store and we can’t be making a different deal here. If that is not possible than I want a one-time bounty but we need to very careful here so this doesn’t spillover to the app store,” one exec wrote. (The emails are threaded such that it’s hard to tell who is replying to whom.)

Back in November 2020, Apple launched the App Store Small Business Program, which cut its App Store fee from 30% 15% for the first time. The program is available to any developer making less than $1 million per year in revenue on the App Store, which Apple says will cover 98% of developers.

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