Apple adds more carve-outs to its EU core tech fee after criticism from devs

Image Credits: Bryce Durbin / TechCrunch

Apple is tweaking how it applies a new fee that can affect iOS developers in the European Union as it continues to configure its approach to the bloc’s Digital Markets Act (DMA): Developers of free apps will be able to avoid the fee entirely under changes it announced Thursday, which apply from today, while other developers earning under a certain revenue threshold will get longer before they have to pay Apple the fee.

The core technology fee (CTF) remains opt-in for iOS developers in the region, as Apple continues to offer its standard business terms, but those wanting to take up new entitlements the DMA has required Apple to offer — such as allowing sideloading of apps, third-party app stores, and support for alternative payment tech than Apple’s own — must agree to the set of business terms that include the CTF (as Apple calls it).

The fee remains under scrutiny in the region where the Commission, which enforces the DMA on Apple and other gatekeepers — and opened its first investigations, including on Apple, in March — is actively exploring whether the mechanism is enabling the iPhone maker to avoid its obligations to open up the App Store to competition, such as from third-party app stores. But so far the EU hasn’t prevented Apple from charging a fee.

Apple said it’s making changes to the CTF in response to feedback from thousands of developers. Some have expressed concern the fee risks penalizing those who offer free non-commercial apps or small developers who end up with a surprise hit on their hands. An app that goes viral and crosses the 1 million first annual installs threshold Apple had already set before the fee kicks in could end up owing the tech giant a lot of money, since the fee costs €0.50 for each first annual install per year after the 1 million threshold.

In information provided for developers, Apple said the no-fee-for-free-apps tweak is intended to give “students, hobbyists, and other non-commercial developers an opportunity to create a popular app without paying the CTF.” Developers will need to certify their non-commercial status annually to Apple to keep qualifying for the fee exemption. (NB: Government bodies and accredited educational institutions were already exempted from paying the CTF, provided they meet Apple’s criteria.)

Apple said the second change it’s announced aims to provide small developers that score a hit app more time to scale their business. Devs earning less than €10 million in global annual business revenue will get a three-year “free on-ramp to the CTF,” as its developer materials put it.

“Within this 3-year period, if a small developer that hasn’t previously exceeded one million first annual installs crosses the threshold for the first time, they won’t pay the CTF, even if they continue to exceed one million first annual installs during that time,” Apple wrote in a blog post. “If a small developer grows to earn global revenue between €10 million and €50 million within the 3-year on-ramp period, they’ll start to pay the CTF after one million first annual installs up to a cap of €1 million per year.”

Earlier this week the EU announced that Apple’s tablet OS platform, iPadOS, would also soon fall under the DMA too — giving the company six months to ensure it complies with the same rules that already apply to iOS, the App Store and Apple’s Safari browser.

Apple confirmed today that all DMA-related changes it’s applied to iOS will also apply on iPadOS later this fall. (Under the DMA it has six months to meet the iPadOS compliance deadline.)

“Developers can choose to adopt the Alternative Business Terms for Apps in the EU that will include these additional capabilities and options on iPadOS, or stay on Apple’s existing terms,” it wrote in the blog post.

“Once these changes are publicly available to users in the EU, the CTF will also apply to iPadOS apps downloaded through the App Store, Web Distribution, and/or alternative marketplaces,” it also noted, adding: “Users who install the same app on both iOS and iPadOS within a 12-month period will only generate one first annual install for that app.”