Many users, developers and content publishers criticized the almost arbitrary but industry-wide practice of dividing revenues by 70% for developers and 30% for the store owner, but that could have been really worse. At that time, when that division was not yet marked, Apple apparently planned to buy a bigger piece of that pie. Sure, this is history and the company ended up getting less, but it does provide some tips on how things could have gotten worse in the early days of smartphones and apps.
The revelation came from internal emails that were submitted to the US House Judiciary Committee that is currently investigating Big Tech, especially Apple and Google, for alleged anti-competitive practices. Part of this investigation naturally invested in the control of the app stores of their platforms by both, which, in turn, could put some rival services and developers at a disadvantage. This latest evidence also suggests how Apple could have heavily armed these publishers to give a bigger share than they normally would have.
The documents show conversations between Apple’s SVP of Internet Software and Services, Eddy Cue, suggesting that they receive 40% of the subscription cut made through the App Store, at least in the first year of subscription. That was in 2011, just three years after the App Store was launched. In the end, however, Apple really took even less than that, and now it only takes 30% in the first year of a subscription and 15% in subsequent years.
It probably could have done Apple more harm than good if it had carried out that plan. While already a force to be reckoned with until then, the nascent iPhone ecosystem could have been damaged by what will easily be seen as a greedy attempt to make a profit. Even the 30% cut in subscriptions has been aggressively contested by companies like Spotify and is causing legal headaches at Apple.
The 70/30 revenue share has always been contentious and, until recently, has simply been accepted as a status quo. With vocal criticism from names like Epic Games CEO Tim Sweeney and now antitrust inquiries, that situation could change soon. For his part, Apple’s Tim Cook emphasizes that he not only reduced his revenue cut, but 84% of the app on his App Store did not even pay a cent.