Apple App Store’s Commission Rates Study Misses the Mark

By: Damien Geradin (The Platform Law Blog)

On 22 July 2020, i.e. a few days away from the Congressional hearing (which may however be postponed) where the CEOs of Google, Apple, Facebook and Amazon are expected to testify, the Analysis Group released an Apple-sponsored study entitled “Apple’s App Store and Other Digital Marketplaces: A Comparison of Commission Rates”.

The purpose of this study is to show that “Apple’s App Store commission rate is similar in magnitude to the commission rates charged by many other app stores and digital content marketplaces.” With that objective in mind, the study looks at the rates charged by various marketplaces (app stores, video game digital marketplaces, marketplaces distributing digital content, e-commerce marketplaces). The study also refers to the distribution fees collected by various categories of brick-and-mortar shops.

Surprisingly, while the authors hold PhDs in economics, they do not carry out much economic analysis: the study is limited to observing the commissions charged by various marketplaces without providing any insight as to why these rates are what they are. Its simplistic conclusion is that, because other marketplaces charge commissions in line with those of the App Store (although we will see that this is not necessarily true), Apple is a good corporate citizen in taking a 30% commission on the in-app purchase revenue of apps that offer “digital goods or services” to iOS users. In other words, there is nothing to investigate here. Competition authorities and regulators should look elsewhere.

CONTINUE READING…