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How Companies Like IFTTT Could Be Avoiding Apple's 'App Tax'

How Companies Like IFTTT Could Be Avoiding Apple's 'App Tax'

Apple Inc (NASDAQ: AAPL) continues to make new enemies over its 30% commission charged on apps, in-app purchases and subscriptions paid through the iOS app store.

The Apple Tax: Apple is well-known for taking a 30% commission from companies, a fee that is sometimes referred to as the “Apple Tax.”

CNBC estimates Apple’s apps store had gross sales of $50 billion in 2019. That total would rank the app store at No. 64 on the Fortune 500 as a standalone company for the year.

The app store saw $519 billion in commerce for 2019, according to Apple.

IFTTT Pro Plan: Automation company IFTTT — If This Then That — lets users create automated tasks from different devices, apps and services.

The company launched a new IFTTT Pro Plan last month. Customers can pay what they see fit per month under a limited time offer, with a minimum of $1.99 per month and a suggested price of $9.99 a month.

IFTTT is offering the payment through its own app and the company’s website. This could be cutting out a commission that would be paid to Apple through the app as a subscription service.

When Epic Games, partly owned by Tencent (Pink: TCEHY), worked around the in-app purchasing, it saw “Fortnite” banned from the platform.

Users have taken to Twitter to ask how IFTTT is able to get away with this workaround without an Apple ban.

IFTTT is asking for credit card payment information directly in the app, where users would normally pay with their store's information in the app store. 

Other companies could keep pushing against Apple with workarounds.

Fairness For Companies: One of the arguments from Epic Games in its battle against Apple was the fact that some companies don’t pay commissions to Apple for their apps.

Apple said it takes a 15% to 30% cut from the $61 billion of digital goods and services apps on its platform. Food apps, physical products and tangible services are not made to pay fees to Apple.

For example, when customers book an Uber or a stay at an Airbnb, Apple does not take a cut of that transaction. The same is true when ordering food through an online app like McDonald’s.

However, when customers pay a subscription fee to a company through the app, it's under the commission structure from Apple. (NASDAQ: AMZN) is also normally part of the fairness debate. The online retailer worked out a deal with Apple to only pay a 15% commission on Amazon Prime subscriptions — half of what other companies pay.

What’s Next: Epic Games, Match Group (NASDAQ: MTCH) and Spotify Technology (NYSE: SPOT) are among the companies in the Coalition for App Fairness.

The nonprofit group is working on 10 app store principles it is seeking to demand that Apple follow.

Epic Games and Apple are in an antitrust battle in the United States. Spotify is in an antitrust battle with Apple in the European Union. Both of those cases could pave the way for the future of apps and commissions for Apple and Google (NASDAQ: GOOG).

Photo courtesy of Apple. 


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