As app store legislation targeting tech giants Apple and Google progresses in Congress, Apple is releasing two more new reports today that aim to show how successful the app economy has been under its rule. The company hired outside firms to provide analysis of job growth and income in the iOS developer community. The studies found that the iOS app economy now supports more than 2.2 million jobs in the US and showed a 118% increase in revenue for small developers in the US over the past two years.
Apple has again tapped the Analysis Group for a report — the same firm it reports with to support its position on its commission structure or to highlight the growing volume of trading that’s happening through apps. Last year, for example, that number jumped another 24% to $643 billion, while Apple noted that around 90% of those billings and sales were commission-free.
The bigger point Apple is trying to make with every new report is that Apple’s current system works well – that it’s fair; that its commissions are comparable to competing app stores and other software marketplaces; and that Apple’s App Store business is ultimately good for the economy. But the keynote is also a warning to potential regulators: be careful what you mess around with. Today’s reports are more of the same.
In the study, backed by Analysis Group, Apple said small developer revenue in the App Store grew 113% over the past two years in 2019, more than doubling earnings growth for larger developers. In the US, smaller developers have seen profits rise 118% since 2019. These small developers are the ones making up to $1 million a year and having fewer than 1 million downloads a year, Apple said.
Photo credit: Apple
It’s interesting that Apple has broken out small developers by both revenue and downloads, since its own App Store Small Business Program, launched on January 1, 2021, only uses the $1 million threshold to calculate the commissions for small developers from 30% to 15%. A specific number of downloads is not used as a threshold for this program. If Apple continues to record the same growth metric for years to come, it won’t be possible to make a direct comparison between those numbers and its Small Business Program.
The report also examined the number of new developers joining the App Store ecosystem in 2021, finding that about 24% are from Europe, 23% from China, 14% from the US, 4.3% from Japan and 34% came from other regions including Korea, India and Brazil. The number of smaller developers has also grown in the past two years, according to reports in Great Britain by almost 40% since 2019 and by more than 25% in Germany.
While Apple believes this data can help make the case for the App Store’s successful operations, these numbers show how important the App Store is to a variety of global developers. This, in turn, could also help to show why such a large and powerful system might also be in need of more regulation and competition.
This is in progress now. As Congress pushes ahead with its own app store bills in the US, the big tech reform affecting Apple in the EU comes into force through the Digital Markets Act (DMA), which is expected to be introduced this spring. The DMA will introduce a set of upfront obligations for so-called internet gatekeepers, which are likely to apply to the major app store operators. In the UK, a preliminary report by the Competition Authority last December suggested that both Apple and Google are likely to face intrusions into the controls of their app stores once the government legislates to regulate a proposed ex-ante regime empower tech giants to address entrenched market power. The European Union recently agreed to its own ex-ante reset to tackle Big Tech.
Apple recently took a particularly tough stance on one of the DMA requirements to allow consumers to install apps from outside the App Store, also known as sideloading. Apple has strongly argued that allowing sideloading makes the iPhone less safe and secure for end users. In the US, Apple was embroiled in a lawsuit with Fortnite maker Epic Games over a lot of this — the game maker wants to allow users to install its apps without paying Apple a commission, including by including them in its own app store hosts and processes own payments. This lawsuit is being appealed.
Today’s reports even suggest that some big developers – maybe even those of Epic’s size – owe their mobile successes to Apple’s App Store.
The study charts the growth of developers who made more than $1 million on the App Store in 2021 and finds that 45% of today’s big developers were either not on the App Store or fewer than 10,000 five years ago earned US dollars.
Photo credit: Apple
While it’s always interesting to have access to fresh data from the App Store, the latest research from Apple just goes to show how powerful the App Store has become over the years. It’s an ecosystem responsible for billions of dollars in commerce, fueling job growth, and where Apple’s decisions on revenue-sharing agreements and developer policies can impact companies that make millions.
Apple concluded the reports by noting that the size of the App Store itself has now grown to 1.8 million apps. The store is visited by over 600 million people weekly, it said, and Apple has more than 30 million registered developers.
The reports come ahead of Apple’s annual developer conference, `C, which takes place June 6-10.
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