Apple Will Cut Its App Store Commission Fee in Half for Small App Makers
- In January, Apple will launch its Small Business Program, which cuts its 30% App Store commission fee in half for developers with less than $1 million in annual net sales on its platform.
- The move comes as Apple faces growing scrutiny from lawmakers and businesses slamming it for what they call anti-competitive practices in its App Store.
- While some view the change as Apple extending an olive branch to developers, larger companies that have criticized its App Store policies, like Spotify and Epic Games, called the program a “‘window dressing” and a calculated move to preserve its monopoly.
- According to the analytics firm Sensor Tower, the top 1% of app publishers generate 93% of the revenue across the App Store and Google’s Play Store.
Apple’s Small Business Program
Apple said Wednesday that it will cut its App Store commission fee in half for developers with less than $1 million in annual net sales on its platform.
The move is part of its new Small Business Program and will go into effect on Jan. 1.
Since Apple currently takes a 30% commission from the total price of paid apps and in-app purchases, this change cuts the fee down to 15% for small and new developers.
This is a pretty major move coming from Apple, and many are describing it as the company’s attempt at extending an olive branch to developers because lawmakers and businesses around the world are focusing intensely on its App Store business practices. Many have already faulted Apple for anti-competitive and unfair behavior.
Big Companies React
At first glance, it actually does seem a little surprising that Apple would do this. In its annual filing with the SEC last month, Apple said reducing its App Store commission rate could hurt its financial results since it’s a major revenue point for its business.
However, Apple will continue to charge top-grossing apps its 30% fee, so it’s very likely that the financial impact of this change could be minimal.
In fact, several experts note that apps are typically a sort of “winner-takes-most” kind of business. According to a 2019 estimate from the app analytics firm Sensor Tower, the top 1% of app publishers generate 93% of the revenue across the App Store and Google’s Play Store.
The news is definitely good for small businesses, especially those hurting amid the pandemic. It also opens doors for those looking to add more virtual offerings under their businesses.
Still, the big companies who have been critical of Apple won’t see it as helpful. Epic Games, for instance, which is still in legal battles with Apple, released a statement criticizing the move.
“This would be something to celebrate were it not a calculated move by Apple to divide app creators and preserve their monopoly on stores and payments, again breaking the promise of treating all developers equally,” it said.
“By giving special 15 percent terms to select robber barons like Amazon, and now also to small indies, Apple is hoping to remove enough critics that they can get away with their blockade on competition and 30 percent tax on most in-app purchases. But consumers will still pay inflated prices marked up by the Apple tax.”
Spotify, which has also challenged Apple’s App Store fees before, also commented on the matter.
“Apple’s anti-competitive behavior threatens all developers on iOS, and this latest move further demonstrates that their App Store policies are arbitrary and capricious,” it said.
“While we find their fees to be excessive and discriminatory, Apple’s tying of its own payment system to the App Store and the communications restrictions it uses to punish developers who choose not to use it, put apps like Spotify at a significant disadvantage to their own competing service. Ensuring that the market remains competitive is a critical task.”
“We hope that regulators will ignore Apple’s ‘window dressing’ and act with urgency to protect consumer choice, ensure fair competition, and create a level playing field for all,” it concluded.
See what others are saying: (CNBC) (The Verge) (Polygon)
Bioré Apologizes For Referencing School Shooting in Mental Health Ad Campaign
“Our tonality was completely inappropriate. We are so sorry,” the skincare brand said.
Video Faces Backlash
The skincare brand Bioré apologized this week for partnering with a school shooting survivor as part of its Mental Health Awareness Month campaign.
“We are committed to continuing our mental health mission, but we promise to do it in a better way,” the company said in an Instagram post on Sunday.
Last week, influencer and recent Michigan State University graduate Cecilee Max-Brown posted a video to TikTok sponsored by Bioré where she discussed the numerous challenges she had faced throughout the year. Among them was a school shooting on her college’s campus, which killed three people in February.
“Life has thrown countless obstacles at me this year, from the school shooting to having no idea what life is going to look like after college,” Max-Brown says in the video. “In honor of mental health awareness month, I’m partnering with Bioré skin care to strip away the stigma of anxiety.
“We want you to get it all out, not only what’s in your pores, but most importantly, what’s on your mind, too,” she continued.
In the 50-second video, Max-Brown went on to discuss more details about her mental health struggles, as well as how “seeing the effects of gun violence firsthand” has impacted her and led to “countless anxiety attacks.”
“I will never forget the feeling of terror that I had walking around campus for weeks in a place I considered home,” she said before closing the video by encouraging her followers to participate in Bioré’s mental health campaign.
The video ignited swift outrage from people who accused Bioré of using a school shooting to sell products. In its apology, the brand admitted the video was misguided.
In the past, Bioré said it has worked with influencers to discuss and reduce mental health stigmas, as the subject is a top priority for its consumers.
“This time, however, we did it the wrong way,” the company said. “We lacked sensitivity around an incredibly serious tragedy, and our tonality was completely inappropriate. We are so sorry.”
Max-Brown also apologized on TikTok, writing that the video was intended to spread awareness, not suggest a product fixed the struggles she has experienced as a result of the shooting.
“I did not mean to desensitize the traumatic event that took place as I know the effects that it has had on me and the Spartan community,” she wrote.
Max-Brown has since removed the initial sponsored video from her account.
See what others are saying: (The New York Times) (NBC News) (The Independent)
Canada’s WestJet Pilots Give 72-Hour Notice For Strike Amid Wave of American Strike Authorizations
“We kept the airline alive during the pandemic. The company is poised to have wild profits going forward and they’re giving us the stiff arm at the table,” said a United Airlines union member to The Washington Post.
Airline Staffers Ready to Strike
Pilots across North America have been inching towards industry-shaking strikes for the last several weeks.
Most recently, Canada’s WestJet Airline pilots issued their 72-hour strike notice on Monday. This means a strike could start as early as Friday, potentially leading to major disruptions for travelers over the Victoria Day holiday weekend.
WestJet pilots are looking for better scheduling and higher pay. Specifically, they want to be paid at a similar rate to their American counterparts.
However, staffers for many American airlines are also ready to fight for higher wages, among other things. Pilots with both Southwest and American Airlines have approved strikes in recent weeks. United Airlines, although they haven’t authorized a strike, spent Friday picketing major airports across the country. Pilots from all three carriers are pushing for higher salaries, better scheduling, and better rules that establish what is expected of each employee on the job.
All of these pilots are pointing to Delta as an example, which recently ratified a $7 billion contract that will raise the wages of their 15,000 pilots by 34% over 4 years.
However, despite the authorizations, an actual walkout is unlikely. In order to legally strike in the U.S., airline workers’ unions have to go through federal mediation with the airlines themselves and that mediator has to decide that negotiation is unproductive and release both sides. Even then, a strike can be blocked by Congress or the president.
However, these strike authorizations are meant to put further pressure on the airlines to come to the table with their pilots and find some solution.
“We kept the airline alive during the pandemic. The company is poised to have wild profits going forward and they’re giving us the stiff arm at the table,” Garth Thompson, chair of the United Master Executive Council of the Air Line Pilots Association, said to the Washington Post.
The response from airlines thus far has been mixed. Southwest said in a statement that the strike authorization vote has absolutely no effect on their operations. Casey Murray, the president of the pilot’s union, said the union will petition mediators to strike because they have been in negotiations with Southwest for more than three years with no solution on the horizon.
American Airlines and its pilots, on the other hand, are much closer to reaching a solution. CEO Robert Isom even said the airline is prepared to match the pay rates of Delta pilots.
“We remain confident that an agreement for our pilots is within reach and can be finalized quickly,” the airline said in a statement. “The finish line is in sight.”
See what others are saying: (The Washington Post) (AP News) (Reuters)
Dealers are Still Selling Theft-Vulnerable Kia and Hyundais Despite Insurance Companies Refusing to Cover Them
“This, again, just seems like a complete debacle — that these companies and these industries are not working together to protect the consumer,” said Reyna Garcia to NPR.
Kia Boys Challenge
Dating back to 2021, the viral “Kia Boys” challenge has caused thefts of specific Kia and Hyundai models to skyrocket. After an unanswered plea for recall by more than a dozen state attorney generals, insurance companies have taken the problem into their own hands by refusing coverage to new customers with certain Kia and Hyundai models.
The “Kia Boys” challenge included videos demonstrating how to hotwire these cars with a USB adaptor in a matter of seconds.
This type of theft is only possible because the Kia and Hyundai models in question do not have an electronic immobilizer within the vehicle. An electronic immobilizer is a popular piece of anti-theft technology where a computer chip in the engine communicates with a chip in the key to verify a match – and if there is no match, the car does not move.
Officials say that more than 8 million Kias and Hyundais lack an immobilizer and can be stolen using just a USB cable.
This viral challenge caused a massive uptick in thefts of these vehicles. Minneapolis saw an 836% increase in Kia and Hyundai thefts in 2022 and Chicago saw an 800% increase in thefts over just a month last year.
In April, attorney generals from 17 states and Washington, D.C. sent a letter to the National Highway Traffic Safety Administration, asking them to recall the models affected by this vulnerability. As of now, no such recall has been enacted.
Kia and Hyundai are both offering free software updates to fix the problem but there are still countless cars without the update on the market.
Major insurance companies like Allstate, Progressive, and State Farm have confirmed that they are not granting new policies for certain Kia and Hyundai models due to their high theft risk. However, this hasn’t stopped used car dealerships from selling these models.
Reyna Garcia was a victim of this unfortunate situation. She purchased a Kia Forte from a used car dealership only to find, several weeks later, that her Allstate insurance would not cover it.
She then tried to sell the car back to the dealership but their offer would have put her at a $7,000 loss. Eventually, she found new coverage for her vehicles and home at a rate $150 more expensive than she’d been paying elsewhere.
“I feel super vulnerable. I feel taken advantage of by a dealer. I feel like this is their industry, and they should be knowledgeable about this,” Garcia said to NPR. “And I’m also very frustrated with the insurance industry. All of those things came colliding, and I think the consumer is definitely stuck in the middle.”
She went on to add, “I’m an intelligent person, and I feel very stuck. And the financial loss could be huge. I’m sitting here trying to figure out how I could come up with $19,000 to pay for a car that we can’t drive. This, again, just seems like a complete debacle — that these companies and these industries are not working together to protect the consumer.”
Kia and Hyundai Response
Kia and Hyundai are working with some insurance companies to make sure that new customers can get coverage.
“Kia America regrets the decision by certain insurers and its impact on owners and lessees of select Kia vehicles, which we anticipate will be temporary, “ said Kia spokesperson James Bell in a statement to NPR. “We are in contact with major insurance carriers so they are aware of the actions we have taken and we are actively working with them to ensure our customers have access to quality and comprehensive coverage.”
Hyundai recently announced that they are working with AAA-affiliated insurance companies to offer plans to drivers impacted by the vulnerability.
However, state governments have also taken notice of the insurance companies’ stall on coverage for these models. The Maryland Insurance Administration recently released a bulletin, telling insurance companies they have to offer coverage in line with rates filed with the state or else companies could be in violation of the law.