Apple is one of the giant tech companies in the world and there is no wonder that they have been entitled the king of Silicone Valley. Around two to three days earlier, Apple hit the mark of $2 trillion that has made this company the most profitable and successful tech giant out there. Well, it seems like Apple earns these milestones by cutting profits from apps’ in-app purchases.
Around a couple of days ago, Apple announced that they will be reducing their cut from the in-app purchases by half. They will be reducing this profit for the app that makes $1 million per annum and nobody clearly knew the reason. Well, the cat is out of the bag and that’s because Apple has faced a new lawsuit by Fortnite developers.
As for now, Apple takes 30% commission with paid apps used on iPhones, iPads, and other iOS devices. However, Epic Games announced that they were filing a lawsuit against Apple through the Australian Federal Court. According to Epic Games, Apple removed its online video game, Fortnite from the App Store with an intent to bypass this new payment system.
As per the new existing developer discount, the apps that made up to $1 million are up for the cut-rate. On the other hand, the apps that gained more than $1 million a year ago, will qualify for this discount next year. In case the threshold is passed in a year, the 30% charge will be applied for the entire year.
As far as the revenue forgoing is concerned regarding the change in monetary change, Apple hasn’t released statement about the matter. However, they have shared that App Store has 1.8 million apps and the majority of them will be eligible for the discount. Similarly, Apple will state that this new discount won’t be applied to the Epic Games.
According to the forecast, Epic Games is likely to make approximately $5 billion with 2020 but not only through the Apple App Store. So, Epic Games has announced that they will file the court action in Australia, given the fee charged by Apple. This fee was charged for the in-app purchase. According to the filing, Epic Games states that Apple is misusing its power to trespass the rival payment system.
In simpler words, Epic Games think that Apple is wrongfully affecting the profit rates and even increasing the price of in-app purchases for Apple users. According to Tim Sweeny, the chief executive has said that Apple is trying to stifle the competition by reducing the in-app purchases. Also, he mentioned that this is not about Epic and Apple’s competition.
That’s to say because they need to ponder if the creators and consumers can do business with mobile platforms, rather than worrying about the monopoly. As far as Apple is concerned, they have said that Epic Game’s payment bypasses as clandestine and deceptive. Also, Apple’s spokeswoman stated that Epic Game’s actions are clearly pointing towards violation of the App Store guidelines that are in fact designed to protect the consumers.