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Tech Giants Cut Commissions It Charges App Developers

STEVE INSKEEP, HOST:

Two big tech companies made a rare concession to developers that do business with them. Operators of mobile phone apps have to pay to get their products seen by customers of Apple and Google. Critics say those big tech companies are so powerful, they are like nation states. And the charges for mobile phone apps were like a tax. Now comes a tax cut. Apple and Google are financial supporters of NPR, which we cover like any companies. And here, Bobby Allyn reports.

BOBBY ALLYN, BYLINE: Video game developer Derrick Morton, who runs a company called FlowPlay, says it's daunting to sell his video games for mobile phones because Apple and Google's app stores take a big cut.

DERRICK MORTON: In a market where there's a 30% fee for just for the platform, this breaks down the pie to the extent where there's almost nothing left for developers.

ALLYN: If you have a smartphone, chances are you have to use an app store controlled by Apple or Google to download stuff. The companies say they need to collect a commission on what you buy to support the privacy and security of apps. Apple and Google have defended these fees for more than a decade. But now the companies have caved and slashed them.

RANDY NELSON: You have sort of the reality of this. And then you have the optics of this.

ALLYN: What Randy Nelson of the analytics firm Sensor Tower means is, yes, this is a victory for small app developers who are set to benefit the most.

NELSON: But for Apple at the end of the day or for Google at the end of the day, what this is actually meaning to their bottom lines is not that substantial.

ALLYN: But this was never just about money. These changes are coming right in the midst of some serious legal jeopardy for Apple and Google. State and federal investigators are probing whether the companies broke the law by allegedly making it hard for rivals to compete with them. Apple CEO Tim Cook is even scheduled to testify about these fees in a trial next month. So the timing of the fee cuts, that is interesting, says Chris Sagers. He's a law professor at Cleveland State University who studies antitrust issues.

CHRIS SAGERS: I think it probably reflects the sense of the two companies that they're in significant trouble.

ALLYN: Trouble, Sagers says, that extending an olive branch to developers right now is not going to do much about.

SAGERS: Two firms made an agreement to lower their prices only when they're under immense legal pressure - doesn't make me think that this market has become competitive or that everything is fine.

ALLYN: Morton at the 62-person video game company FlowPlay says, we'll take it.

MORTON: I would say the really small guys are ecstatic.

ALLYN: So much so that Morton says he's going to make some new moves into mobile video game apps.

Bobby Allyn, NPR News, San Francisco.

(SOUNDBITE OF MOKHOV'S "SPRING EVENING") Transcript provided by NPR, Copyright NPR.