Report: Top Apple Exec Suggested Cutting App Store Fees a Decade Ago

According to a recent report, Apple executive Phil Schiller suggested that the company reduce its app store fees a decade ago when the store reached $1 billion in profits. The iPhone giant didn’t take Schiller’s advice, keeping its 30 percent app store fee in place to the present day.

Bloomberg reports that Phil Schiller, Apple’s top executive overseeing the company’s App Store, suggested cutting the store’s fees a decade ago when the store reached $1 billion in profitability, according to evidence presented by Epic Games in its trial with Apple.

Schiller, who runs Apple’s App Store and previously acted as Apple’s marketing chief, asked the company’s head of services, Eddy Cue, in 2011 whether “we think our 70/30 split will last forever?” Schiller’s question related to Apple’s 30 percent cut from developers for paid app downloads, in-app purchases, and subscriptions purchased within the App Store.

In a July 2011 email, Schiller stated that he was a “staunch reporter” of the fee, but didn’t believe it would remain “unchanged forever.” The 30 percent fee and Apple’s rules relating to in-app purchases are two of the key issues in Epic’s lawsuit against Apple. Epic alleges that Apple’s actions are anti-competitive and unfairly deprive Epic of revenue.

The battle between the two firms came to a head in August when Epic added its own payment system to its popular video game Fortnite for in-app purchases, bypassing Apple’s payment processing system and its fees. Apple then removed the game from the App Store, cutting off access to over 1 billion iPhone and iPad customers.

In the email presented by Epic Games, Schiller suggested that if Apple were to eventually make a change to its fee structure, it should do so from a position of strength. “one thought,” he said would be to adjust the fees once the App Store reached $1 billion per year in profit. He further suggested a 25 percent or 20 percent fee if that would still generate $1 billion in annual profit.

Schiller wrote in the email: “I know that this is controversial, I just tee it up as another way to look at the size of the business, what we want to achieve, and how we stay competitive.”

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