As It Faces More Scrutiny, Apple Will Reduce App Store Fees If Publishers Provide Apple News Content

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  • News publishers who participate in Apple News will be eligible to reduce Apple's cut of first-year in-app subscriptions from 30% to 15%.
  • The move is the latest example of Apple carving out exceptions for its 30% fee for in-app purchases for different industries
  • The reduced rate will apply to in-app subscriptions through the publisher's app as well as subscriptions through the Apple News app.

News publishers who participate in Apple News will be eligible to reduce Apple's cut of first-year in-app subscriptions from 30% to 15%, Apple announced Thursday.

The move is the latest example of Apple carving out exceptions for its 30% fee for in-app purchases for different industries and types of businesses under increasing scrutiny and criticism from app developers, competitors and regulators.

Apple News is an app that comes pre-installed on iPhones that displays a variety of news stories in a single interface. It has 125 million monthly active users, Apple said, and the app is part of the company's growing services business that accounted for 21% of Apple's sales in the most recent quarter.

In order to secure the reduction, the publishers will have to apply to a new program Apple is calling the News Partner Program.

It will require news publishers to agree to supply all their content to Apple in its preferred Apple News file format and that they provide metadata, or information about the stories, required by Apple. Publishers will also be required to have an active, robust presence in the markets where Apple News is available.

Publishers will be able to apply to the program on Apple's website starting Thursday.

Participants in the program will also be able to get the reduced 15% take rate in the first year for subscriptions initiated through both their own app as well as the Apple News app. Some publications have paywalls on Apple News and allow readers to subscribe through the app.

News publishers are not the highest grossing apps on the App Store. In the U.S., the top 10 grossing publishers booked just more than $68 million in revenue in the first seven months of 2021, said Sensor Tower, a firm tracking App Store trends. Those companies include the publishers of The New York Times, Wall Street Journal, Washington Post, Bloomberg News and CNBC, all of which sell subscription access to paywalled stories through Apple's App Store.

Not the first program to reduce App Store fees

Apple currently charges 30% of in-app purchases for the first year of a subscription billed through the App Store, but that take is reduced to 15% if the customer subscribes for a second year.

Last year, Apple introduced the App Store Small Business Program, which enables companies that get less than $1 million in net sales per year from Apple to receive a reduced take rate of 15% as well. That program would be a better fit for publishers who make less than $1 million per year, Apple said.

Apple also has a program for established video providers, such as Amazon, that offers the lower 15% take rate if the companies integrate their apps with Siri and other Apple features.

Apple said Wednesday that it was launching the program to support publishers and to ensure its customers have access to quality news sources.

But the announcement comes as Apple's 30% take from the majority of in-app purchases is under more pressure than ever.

A bipartisan bill currently being debated in Congress would target Apple's in-app payment system and require the company to allow app developers to use other payment processors that charge less.

A decision in an antitrust trial centering on Apple's App Store policies is also expected later this year. Epic Games sued Apple in 2019 seeking to avoid its 30% fee on in-app purchases. Netflix and Spotify have removed the ability to subscribe to their services through Apple's App Store to avoid the 15% to 30% take.

Several overseas governments are examining Apple's App Store policies and its 30% cut. This week, a South Korean parliamentary committee took a key step toward banning Apple from forcing developers to use its payment system.

Apple has argued in court that its 30% commission is essentially the same as other online software stores like Google Play or stores for video game consoles, and Apple's fee has decreased over time.

Publishers were not informed of the program before it launched, so there are no named participants yet, Apple said. Publishers who participate in the program will still be able to sell ads in Apple News and use other business models, such as affiliate links.

The program is separate from Apple News+, a subscription to a bundle of digital magazines and newspapers that costs $9.99 per month in the U.S.

The Apple News service is only available in U.S., U.K., Canada and Australia, a lower number of international markets than other Apple services. Publishers outside these countries can provide Apple with an RSS feed and gain access to the program.

Apple has hired human editors to curate its Apple News feeds and to compile special packages for topics like the coronavirus pandemic and the 2020 elections.

Copyright CNBC
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