Epic Games, the developers of Fortnite, has presented a 10-year-old email to Steve Jobs from Apple’s marketing chief Phil Schiller as evidence to fight Apple in court. The mail from Schiller to Jobs and Eddy Cue (head of services) talks about reducing the App Store commission that Apple charges developers from 30% to 20%.
Schiller asked whether Apple can continue with the “70/30 split” forever. The split refers to the 30% fees that Apple charges developers for paid apps, purchases made inside the app along with subscriptions. While Schiller made it clear that he is a “staunch supporter” of the fees, he was not confident that the 30% cut can remain “unchanged forever”, as per a report by Bloomberg which first was to report on the said email.
Epic Games has dragged Apple to court claiming that Apple’s rules are anticompetitive and unfair which has caused a loss of revenue. Apple has kicked out Fortnite from the App Store after Epic Games added its own payment system bypassing Apple. A separate payment mechanism meant that Epic Games need not pay commission to Apple at all, something that is totally against the policies of the iPhone maker.
In his email, Schiller gave a head up by stating if at all Apple were to reconsider the commission and reduce it, the company should do it “from a position of strength rather than weakness”. He also said that once the App Store profit reached $1 billion annually then the fee could be reduced to 25% or even 20%. He mentioned that reducing the fee to 20% would be quite possible if the company was able to keep up with the $1 billion profit a year run rate as more people join Apple’s ecosystem.
“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,” he said Schiller in the email in July 2011.
Here’s a snapshot of the email as published by Bloomberg: