Y Combinator says Apple's 30% fee discourages startup investment

Y Combinator has filed an amicus brief supporting Epic Games in its legal dispute with Apple over app store payment rules.

The startup accelerator argued that Apple’s 30% fee and restrictions on alternative payment methods have discouraged investment in app-based startups.

Epic, which first sued Apple in 2020, claims the company unlawfully limits developers from informing users about payment options outside the app store.

A judge previously ordered Apple to let developers link to alternative payment methods, but Epic alleges Apple’s new policies do not comply.

In April, the judge agreed Apple had violated the injunction related to anti-steering rules, and Apple is now appealing.

Y Combinator is urging the court to reject Apple’s appeal and maintain the current ruling. The next hearing is scheduled for October 21.

🔗 Source: TechCrunch

🧠 Food for thought

1️⃣ Venture capital investment patterns reveal long-term impact of platform fees

Y Combinator’s legal filing reveals how App Store fees have shaped startup investment decisions for nearly two decades since the platform’s 2008 launch1.

The accelerator explicitly stated they have been “hesitant to back app-based businesses that were poor investments due to the Apple Tax,” demonstrating how platform economics influence which startups receive funding1.

This creates a selection bias in the startup ecosystem where innovative app concepts may never receive initial backing if investors view the 30% revenue share as making the business model unviable from the start.

Y Combinator’s assertion that they can now “seriously consider investing in innovative businesses that would have been impossible in the past” suggests entire categories of potential startups may have been systematically underfunded due to platform fee structures1.

2️⃣ Regulatory momentum builds across multiple Big Tech fronts simultaneously

The timing of Y Combinator’s legal brief coincides with broader antitrust victories, including the Department of Justice’s recent landmark win against Google for monopolizing digital advertising markets2.

This creates a legal environment where different aspects of Big Tech market power face simultaneous challenges, potentially reinforcing each regulatory action’s impact.