Amazon Appstore Reduces Fees for Small Developers & Offers AWS Credits

Amazon Launches Small Business Accelerator Program for App Developers

Mirroring strategies adopted by leading app marketplaces like Apple and Google, Amazon has unveiled its Amazon Appstore Small Business Accelerator Program this week. This initiative introduces reduced commission rates on app developer earnings for qualifying small-scale businesses.

Previously, Amazon’s Appstore levied a 30% commission on all revenue, encompassing in-app purchases. Now, developers who generated up to $1 million in revenue during the preceding calendar year will only be subject to a 20% commission. Furthermore, the program incorporates benefits in the form of AWS credits.

Program Structure and Comparison

The structure of this program closely resembles Apple’s App Store Small Business Program, which was introduced in late 2020. Apple reduced its commission to 15% for developers earning under $1 million annually, reverting to the standard 30% rate once that threshold is surpassed. This rate remains consistent throughout the following year.

Google implemented a slightly different approach, decreasing commissions to 15% on the initial $1 million in developer revenue earned via the Play billing system each year.

While Amazon’s commission remains at 20%, this is offset by the inclusion of AWS credits offered to developers.

AWS Credit Benefits

Developers with Appstore revenue below $1 million in a given calendar year will receive AWS promotional credits equivalent to 10% of their earnings. These credits can be utilized for a wide array of AWS services.

This encompasses fundamental infrastructure technologies like compute power, data storage, and databases, as well as advanced solutions such as machine learning, artificial intelligence, data analytics, and Internet of Things technologies, according to Amazon.

Amazon asserts that these combined benefits equate to a value of up to 90% of revenue.

Eligibility and Revenue Thresholds

Should a developer’s revenue exceed $1 million within the current year, they will revert to the standard royalty rate and will no longer be eligible for AWS credits for the remainder of that year.

However, if their revenue subsequently falls below $1 million in a future year, they will regain eligibility for the Small Business program in the following calendar year.

Amazon’s Statement

“By facilitating small businesses’ initial engagement with AWS through credits, we are streamlining the process of building and expanding their app businesses,” stated Palanidaran Chidambaram, Director of the Amazon Appstore. “AWS provides developers with straightforward access to a comprehensive suite of technologies, empowering them to innovate rapidly and realize their visions,” he added.

Industry Context and Regulatory Pressure

These adjustments to app store commission structures occur amidst growing regulatory scrutiny of tech giants’ business practices. Larger app publishers, including companies like Basecamp, Spotify, and Epic Games, have voiced concerns regarding anticompetitive behavior.

Epic Games is currently pursuing legal action against Apple concerning app store fees, a case with potentially significant implications. In response, both Apple and Google have lowered fees for smaller businesses as a gesture of goodwill, and a move unlikely to substantially impact their overall app store revenues.

Program Launch Details

Amazon has announced that the new program will be launched in Q4 2021, with further details regarding participation to be released at that time.