Apple-Funded Study on EU Alternative App Store Business Terms
The Analysis Group (MacRumors, Slashdot, Hacker News):
Despite commission rates typically falling by about 10 percentage points, current evidence shows that developers kept the prices of what they sold through the App Store the same or increased them more than 90% of the time.
[…]
Developers’ decision not to pass on commission savings to EU users mirrors Apple’s past experiences following the launch of multiple initiatives that reduced commission rates. For example, when Apple reduced commission rates for tens of thousands of small developers under the Small Business Program, developers decreased only a small minority of prices in the US storefront.
In addition to developers keeping most of the commission savings for themselves, the overwhelming majority of those savings—more than 86%—went to developers outside the EU.
I think the way this is framed is probably more revealing than the actual results. It seems to be using a straw man that the purpose of the DMA and the Small Business Program was to lower the prices paid by consumers. But the EU said that the DMA was meant to “make the digital sector fairer and more competitive,” and Apple said the Small Business Program was mean to “accelerate innovation and help propel your small business forward.” Now Apple is acting as though it and end users are the only parties that matter, so by implication the money must have been wasted. There’s no consideration that maybe these funds helped some developers stay in business or invest more in the products, both of which would be beneficial to the platform as a whole (including Apple).
To answer this question, this study compares the prices set by developers for digital products in EU App Store storefronts during the three months before they enrolled in the alternative business terms (the “before” period) with the prices they set during the three months after enrollment, when they benefited from decreased commission rates (the “after” period). This study focuses on the cohorts of developers who enrolled in the alternative business terms from March 2024 through September 2024.
[…]
The fact that the share of products with observed price decreases barely changed when looking at an extended after-period suggests that the small share of observed price decreases is not dependent on the length of the post-enrollment period observed.
I can see why they looked at what specific developers did after adopting the new terms, but they didn’t have a control group. I think that for a good study design you would want to compare with developers who didn’t switch to the alternative terms. Were their prices more or less likely to stay the same or increase? My impression is that software prices have overall increased over the last few years, so even staying the same would be a decrease relative to the market.
There’s also a section where they say this doesn’t have anything to do with the CTF. I guess their assumption is that these developers knew they would remain small and so would not be subject to the CTF in the future? My impression at the time was that this was all very confusing and subject to change, and everyone was worried about the looming CTF. I’m surprised that even 21,000 apps switched to the alternative terms.
The way the European Commission has generally framed the DMA is as a matter of consumer choices and reducing the distortions of a market within a market. More competition within these platforms and better interoperability between them, it is arguing here and elsewhere, can lower prices. Interpreting this sentence to mean “lower commissions and therefore lower app prices for consumers” seems to me like a stretch.
The study’s headline findings might sound negative, but it actually documents a modest increase in developer earnings[…] Against €403 million in sales, a €20 million reduction in commission is noteworthy. And even though most developers who benefitted are outside the E.U., many are probably small businesses[…] It is hard for me to believe Apple having €20 million less in its bank account is of comparable impact to that of a bunch of small developers having €20 million more to spend and invest.
Previously:
- App Store Study Shows 90% of What?
- EU App Store Tiers and Core Technology Commission
- Apple Tweaks New EU App Store Business Terms
- DMA Compliance: Alternative App Stores But No Sideloading
- App Store Small Business Program With 15% Fee
