The app stores of Apple Inc. and Google are facing a growing number of complaints from companies saying the tech giants are collecting too high a tax for connecting consumers to developers’ wares.percent by the same measure, according to the brokerage firm. The technology giants are expected to earn more than $50 billion each, before interest and tax, in 2020, according to analyst forecast data compiled by Bloomberg.
Netflix Inc. and video game makers Epic Games Inc. and Valve Corp. are among companies that have recently tried to usurp the app stores or complained about the cost of the tolls Apple and Google charge.
Ben Schachter, an analyst at Macquarie said, “The dollars are just getting so big. They just don’t want to be paying Apple and Google billions.”
Apple and Google launched their app stores in 2008, and they soon grew into powerful marketplaces that matched the creations of millions of independent developers with billions of smartphone users. In exchange, the companies take up to 30 percent of the money consumers pay developers.
The companies have won praise for helping to build an app economy that’s projected to grow to $157 billion in 2022, from $82 billion last year.
Apple and Google take 30 percent of subscription dollars and in-app purchases made on iPhones and Android phones using Google’s app store (effectively all those outside China). About two years ago, the companies lowered that cut to 15 percent in some cases.
If app store commissions fell to a blended rate of 5 percent to 15 percent, that would knock up to 21 percent off Apple’s earnings, before interest and tax, by fiscal 2020, Macquarie estimated. Google could lose up to 20 percent by the same measure, according to the brokerage firm.
This is particularly worrying for Apple investors, who are expecting the App Store to support the growth of the company’s services business.
Valve’s Steam planned to release a free iPhone app that let gamers keep playing while away from their computers. Apple blocked the app. Afterwards, the tech giant updated its app review guidelines to ban anything that looks like an app store within an app or gives users the ability to “browse, select, or purchase software not already owned or licensed by the user,” according to Reuters.
Fortnite has grossed $200 million (R2,8 billion) on the Apple App Store since its release there in March, according to Sensor Tower. Apple could make as much as $135 million (R1,93 billion) in fees from the title, Sensor Tower estimates, while Google misses out on at least $50 million (R717 million).
Only the most popular online services can risk not being in Apple and Google’s app stores.
According to Branch co-founder Austin, this just shows how broken the system is. Most developers want to use the app stores, but some are reluctant to pay Apple and Google, so they have to take their chances on the web, he said.
– BLOOMBERG
