Apple App Store Discount For Small Businesses Only Makes A 2.7% Dent To Revenue: Research

The recent moves by Apple Inc. and Alphabet Inc. to cut app store fees for small developers will not make any significant negative impact on the tech giants’ revenues, according to new estimates from app analytics firm Sensor Tower.

What Happened:Google would have missed out on only $587 million, or about 5% of Sensor Tower’s estimate of $11.6 billion in Google Play fees for 2020, had the fee change had been in place on Google Play last year, according to Sensor Tower’s estimates, CNBCreported.

Similarly, Sensor Tower estimates that Apple would have missed out on only $595 million, or about 2.7% of its estimated $21.7 billion in App Store fees in 2020 if Apple’s program had been in place last year.

Google said Tuesday it is reducing the Google Play app store fees for developers by 50%,replicating Apple’s move last year. Beginning July 1, Android developers will be charged only 15% for the first $1 million in digital sales through the Google Play app store, instead of the regular 30% commission. However, the fees will jump back to 30% when the developers exceed $1 million in app store sales.

The Fortnite Row:The new estimates assume significanceamid the ongoing legal battle between Epic Games Inc. against both Apple and Google over the removal of Epic’s “Fortnite” video game last summer from the tech giants’ app stores. Epic had attempted to skirt the 30% in-app purchase commission that Apple charged by offering an alternative payment optionin Fortnite.

Following Google’s move on Tuesday to cut the app store fees, Epic Games CEO Tim Sweeney tweeted that while the far majority of developers will get the new 15% rate and will be less inclined to fight, the far majority of revenue is in apps with the 30% rate.

Why It Matters: Apple and Google have been facing several allegations surrounding their app store policies, including fees for digital purchases. The new estimates indicate that developers who make the most revenue from the app stores will still pay almost 30% of digital sales.

Price Action:Apple shares closed almost 1.3% higher on Tuesday at $125.57, while Google shares also closed almost 1.3% higher at $2,092.52.