Apple’s been criticized by Spotify and other apps, claiming its high commission rates stifle innovation.
Ahead of an antitrust hearing on Capitol Hill next week, Apple is fighting back against the perception that its App Store charges onerous commission rates to developers. It hired economists from the firm Analysis Group, who said the tech giant’s fees were similar to competitors.
The research, published Wednesday, collected commission rates reported on or disclosed by app stores from Amazon, Google, Microsoft, Samsung and others. The company’s economists also studied ticket resale marketplaces, game stores and ride-hailing apps. Overall, the economists said the commissions charged were similar, though stores generally offered different features for consumers and developers.
“The commission rates charged by digital marketplaces most similar to the App Store, such as other app stores and video game digital marketplaces, are generally around 30%,” the economists wrote in study. The economists also broadly defended these commission rates, saying this system lowers “the barriers to entry for small sellers and developers by minimizing upfront payments, and reinforce the marketplace’s incentive to promote matches that generate high long-term value.”
The economists didn’t look into whether the fees stifle innovation or are fair, concerns developers have raised.
Apple’s published research comes just ahead of next week’s congressional hearing on competition in digital marketplaces. The high-profile hearing will include testimony from Apple CEO Tim Cook, as well as Facebook CEO Mark Zuckerberg, Alphabet CEO Sundar Pichai and Amazon CEO Jeff Bezos. The hearing will held on July 27 by the House Judiciary Committee’s Subcommittee on Antitrust.
“Since last June, the subcommittee has been investigating the dominance of a small number of digital platforms and the adequacy of existing antitrust laws and enforcement,” House Judiciary Committee Chairman Jerrold Nadler and Antitrust Subcommittee Chairman David Cicilline said in a joint statement. “Given the central role these corporations play in the lives of the American people, it is critical that their CEOs are forthcoming.”
Regulators the US and Europe have stepped up their investigations into the practices of leading technology companies, including Apple.
In June, the European Commission opened two antitrust probes, looking at Apple Pay and Apple’s App Store. In the case of Apple Pay, regulators are investigating whether Apple unfairly locks out competitors from using the NFC wireless transmission technology that powers Apple Pay on its gadgets. With regards to the App Store, investigators are looking into whether the restrictions Apple places on developers hurts competition. Music service Spotify triggered the investigation when it lodged a complaint with the EU more than a year ago.
Other app developers have similarly complained that Apple is cutting out competition. In June, Apple faced an uproar within its developer community when it refused a new email app called Hey because it didn’t offer in-app purchases for its $99 per year email service. Instead, people signed up with Hey maker Basecamp online, leaving Apple without the 30% commission. Apple and Hey settled the standoff when the email provider included a free trial option in its app.
Regulators in the US are also scrutinizing Apple’s business practices. The Department of Justice has spoken with several companies who are “unhappy” with how Apple runs its App Store, according to reports in Politico and Reuters this year.
CNET’s global team will be covering next week’s congressional hearing, including with the real-time updates, commentary and analysis you can only get here.