Amazon is following in the footsteps of app store giants Apple and Google with this week’s introduction of its Amazon Appstore Small Business Accelerator Program. The new program will reduce the commissions Amazon takes on app developer revenues for qualifying smaller businesses. Previously, Amazon’s Appstore took a 30% cut of revenue, including that from in-app purchases. Now, it will take only 20% from developers who earned up to $1 million in the prior calendar year. The program will additionally offer AWS credits.
This program’s structure is similar to Apple’s App Store Small Business Program, announced in late 2020, which reduced Apple’s cut to 15% for developers who earn up to a $1 million threshold, after which they’re moved to the higher 30% standard rate. This rate then continues as they enter the following year. Google, more recently, took a slightly different course, by lowering the commissions to 15% on the first $1 million of developer revenue earned through the Play billing system each year.
Amazon’s cut remains larger, at 20%, but that’s because it’s offering developers a different type of perk: AWS credits.
The company says developers with less than $1 million in Appstore revenue in a calendar year will receive 10% of their revenue as promotional credit for AWS services. This includes infrastructure technologies like compute, storage and databases — to emerging technologies, such as machine learning and artificial intelligence, data lakes and analytics, and Internet of Things, notes Amazon. This brings total program benefits up to an equivalent of 90% of revenue, Amazon says.
If the developer’s revenue exceeds $1 million during the current year, they’ll revert to the standard royalty rate and no longer receive the AWS credits for the rest of the year.
And if the developer’s revenue in a future year drops below $1 million, they’ll become eligible for the Small Business program again in the next calendar year.
“By helping small businesses get started with AWS through credits, we are making it easier for them to build and grow their app businesses,” noted Amazon Appstore Director Palanidaran Chidambaram, in an announcement. “AWS gives developers easy access to a broad range of technologies so they can innovate faster and build nearly anything they can imagine,” he added.
The changes to app store commission structures come at a time when tech giants are seeing increasing regulatory pressure over the nature of their businesses, which larger app publishers, including Basecamp, Spotify, Epic Games and others have argued are anticompetitive. Epic is also suing Apple over its app store fees, in a potentially precedent-setting case. In response, Apple and Google lowered fees for smaller businesses as a gesture of goodwill — and one that wouldn’t significantly impact their own app store platform revenues.
Amazon says the new program will launch in Q4 2021, and more details about how to participate will be provided at that time.