Elon Musk has strong words for Apple’s 30% App Store commission

Elon Musk has been having himself a moment lately, and he’s been the center of attention after he launched a seemingly successful effort to purchase Twitter and take the company private. Yesterday he took to Twitter to comment on Apple’s App Store commission policy:

Apple’s store is like having a 30% tax on the Internet. Definitely not ok.

He then followed that up with this:

Literally 10 times higher than it should be

Curiously, the tweet these were in reply to had nothing to do with Apple’s App Store commission. It was a link from Slashdot headlined, “PayPal Helped Spur EU Antitrust Complaint Against Apple Payments.” Presumably the connection is that the link in question was about one of the many efforts by Apple’s competitors (in this case PayPal, co-founded by Elon Musk himself) to generate State antitrust action against Apple.

Musk is often not entirely precise in his language, but let’s assume he actually means it when he says, “literally” in that tweet and that his view is that 3% would be a much more fair commission rate. He’s echoing the feeling of many people that Apple’s 30% commission in the App Store is too high. Many have suggested that, while it was a good deal at the dawn of the App Store when pitched to developers used to selling physical copies of software at brick-and-mortar retails stores that charged a higher commission, it’s not a good deal in an all-digital software economy in 2022.

As I’ve often said, I’m not personally wed to any specific commission rate for the App Store. I don’t think Apple is wrong to charge 30%, but I would be totally ok if they lowered it by any amount. I’m more interested in the narratives we use to discuss this, and I’m particularly against Apple’s competitors leveraging glory-seeking politicians to force Apple to give them a more favorable business arrangement. Even if Apple successfully defends itself against antitrust actions that attempt to force a lower App Store commission, I think at some point Apple will bow to developer and press pressure to lower it. I can’t see them going straight to 3%, but who knows?

One way that Elon Musk is being imprecise here is to frame the issue as if Apple is charging 30% on every purchase made on the App Store. That’s not true. Since 2020, Apple has charged a 15% commission for developers making up to a million dollars in revenue per year on the App Store. That means only larger companies, like the ones trying to force a lower commission, are paying 30%.

He’s also grossly exaggerating when he equates Apple’s App Store commission to a 30% tax on the Internet. The App Store is an important contributor to the Internet’s economy, but it’s not remotely close to equalling a majority of all sales on the Internet. On the contrary, while it’s cute to refer to the App Store commission as a “tax,” it’s not one. Taxes are levied by governments and enforced by courts and police. If you fail to pay Apple its commission, you lose your ability to conduct sales in the App Store. Fail to pay your taxes to the State, and you’ll be hauled into a court that could have you arrested.

Look, I like Elon Musk. I consider myself a fan even. I love Tesla and SpaceX, and I fully support Elon’s acquisition of Twitter. Moreover, I’ve long held that if Apple remade its “Here’s To The Crazy Ones” commercial today, it would feature Elon Musk. He’s the poster child for the type of person that that commercial celebrated. But keep in mind too that Elon stands to personally gain from a lower commission in the App Store. For example, Twitter has to pay Apple a commission on every sale of Twitter Blue or Ticketed Spaces in the Twitter apps for iOS and iPadOS. Whatever Elon Musk’s plan is to monetize Twitter under his stewardship, it will likely be affected by the App Store’s commission.

Frankly, Elon Musk, himself a frequent target of State regulation, should be less cavalier about implying that the State should bring antitrust action against Apple’s App Store.