On first glance, that’s a breathtakingly impressive number: $260 billion. Developers on Apple’s App Store earned a quarter of a trillion dollars since its launch in 2008.
Consider just how many companies and independents that cash has breathed life into, it’s staggering. But that’s not the whole story.
If App Store devs have made $260 billion since 2008, that means Apple has potentially made over a hundred billion for doing, well, comparatively very little. Let’s explore this a bit futher.
In a recent press release, Apple stated it paid out $260 billion to developers since the App Store’s launch. On January 6 last year, Apple said it had shelled out “more than $200 billion” in that period.
In other words, in 2021 alone, App Store devs raked in $60 billion.
Great news, right? Shit tons of cash for everyone! Yes, certainly. But also not at all.
For the majority of the App Store’s existence, the company has taken a 30% cut from all the money spent on the platform.
This isn’t uncontroversial and has come under fire in recent years. The highest profile instance is the Epic case, where the Fortnite creator is effectively arguing it should be able to run a payments program outside of Apple’s ecosystem.
In other words, it doesn’t want to pay Apple 30% for in-app purchases.
The entire situation is multi-faceted and complex, but one element the court case brought to light was just how much cash Apple makes from developers. The burgeoning public (and professional) backlash over this forced Apple to react. And it did so by introducing its Small Business Program initiative.
What this means in non-bullshit is Apple reduced its App Store commission to 15% for developers earning less than $1 million a year. A positive move, but one that’s like putting a plaster on an amputated leg.
It’s barely a ripple in the pool Apple is siphoning from development businesses.
Quick maths: Apple App Store edition
At this point, we should work out how much cash Apple is skimming off the top.
In its January 2021 release, Apple said it paid out $200 billion after its 30% cut. Working backwards, this means total revenue was around $285.71 billion. In other words, Apple pocketed around $85.71 billion by the end of 2020.
We saw earlier that Apple shelled out $60 billion to developers across 2021. Because we don’t have access to what split of this falls under 15% or 30% commission, we can say that Apple earned between $10.59 billion and $25.71 billion in 2021 alone.
This means that, since 2008, Apple has made somewhere between $96.3 billion and $112.42 billion from the App Store.
Why earning so much from the App Store is a problem
I’m not going to sit here and say Apple doesn’t deserve to earn a substantial amount of cash from the App Store. It has to provide server space, teams working on the service (in development, moderation, marketing, and editorially), security, and various types of infrastructure.
None of this is cheap. But it’s hard to emphasise just how much $110 billion is.
That’s the equivalent of the nominal GDP of Morocco (roughly $109 billion). That’s an entire country. It has a population of 37 million. It’s 274,460 square miles. With that money it pays for education, roads, hospitals, military, everything.
Apple has outgoings, but let’s not kid ourselves that the majority of what we use from the App Store is created by external devs.
It doesn’t end there though.
After App Store devs are given their 70%, they have to pay tax on it. If they were based in the Netherlands (where I live), that’d amount to 25%.
Want to guess how much tax Apple pays in Europe? Well, thanks to some loopholes (and the Irish government), it gets away with 12.5%. Devs on the other hand are effectively taxed twice: once by the government and once by Apple.
End the monopoly
There are cracks in Apple’s armor. In the Epic court case, the judge ruled that Apple had to allow devs to provide customers with alternative in-app payment options. Of course, Apple is still fighting this.
The 30% cut is incredibly lucrative, especially when it comes to subscriptions. Don’t expect Apple to let it go without a fight.
News releases like this one position Apple as a benevolent figure, beaming down with joy at how well its app-making subjects are doing. The reality is more akin to a feudal lord squeezing every last drop of coin it can from those working the land.
Yes, Apple has done an amazing job at building its App Store platform, but it needs to become an enabler, rather than a leech. Don’t hold your breath though.
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