Apple Adjusts EU Core Tech Fee Following Developer Criticism, Adds More Carve-Outs

Apple is adjusting its approach to comply with the European Union's Digital Markets Act (DMA), which impacts iOS developers in the region. In a recent announcement, Apple revealed changes to how it applies a new fee, affecting developers of free apps and those earning under a certain revenue threshold in the European Union.Under the updated policy, developers of free apps will have the option to entirely avoid the fee, effective immediately.

Additionally, developers earning below a specific revenue threshold will be granted additional time before they are required to pay Apple the fee.While the core technology fee (CTF) remains optional for iOS developers in the European Union, Apple has introduced new entitlements mandated by the DMA. These include provisions such as permitting sideloading of apps, allowing third-party app stores, and supporting alternative payment technologies beyond Apple's own. Developers who wish to access these new entitlements must agree to Apple's set of business terms, which include the CTF.The fee introduced by Apple continues to face scrutiny in the European Union, particularly from the Commission, which enforces the Digital Markets Act (DMA) on tech gatekeepers like Apple.

Despite ongoing investigations by the Commission into Apple's practices, including the fee, no action has been taken to prevent Apple from charging it.In response to feedback from developers, Apple is adjusting the Core Technology Fee (CTF). The company acknowledges concerns raised by developers, particularly regarding the potential impact on those offering free non-commercial apps or small developers who unexpectedly experience a surge in popularity. For instance, apps that surpass the 1 million first annual installs threshold set by Apple before the fee applies may face significant financial obligations to the tech giant, as the fee amounts to €0.50 for each first annual install per year after the threshold.

Apple's decision to make changes to the CTF underscores its commitment to addressing developer concerns and ensuring a fair and equitable ecosystem for all parties involved. However, the ongoing scrutiny from regulators and developers highlights the complexities and challenges inherent in balancing the interests of platform operators and developers within the digital marketplace.Apple's adjustments to the Core Technology Fee (CTF) include two key changes aimed at supporting different segments of developers within its ecosystem. Firstly, the exemption of free apps from the fee is intended to provide opportunities for students, hobbyists, and other non-commercial developers to create popular apps without incurring the CTF. Developers seeking this exemption will need to annually certify their non-commercial status to Apple to remain eligible for the fee waiver.

Notably, government bodies and accredited educational institutions were already exempt from paying the CTF, provided they met Apple's criteria.Secondly, Apple is extending a three-year "free on-ramp to the CTF" for small developers earning less than €10 million in global annual business revenue. During this on-ramp period, if a small developer surpasses the one million first annual installs threshold for the first time, they will not be required to pay the CTF, even if they continue to exceed this threshold throughout the three-year period. Additionally, if a small developer's global revenue grows between €10 million and €50 million within the on-ramp period, they will gradually transition to paying the CTF after one million first annual installs, up to a maximum cap of €1 million per year.

These changes reflect Apple's efforts to support developers of varying sizes and business models, providing them with opportunities to thrive and scale their businesses within the Apple ecosystem.The European Union recently announced that Apple's tablet OS platform, iPadOS, will be subject to the Digital Markets Act (DMA) in the same manner as iOS, the App Store, and Apple's Safari browser. Apple has been given six months to ensure compliance with the DMA rules.

Apple has confirmed that all DMA-related changes applied to iOS will also be implemented on iPadOS later this fall, with a compliance deadline of six months under the DMA. Developers will have the option to adopt the Alternative Business Terms for Apps in the EU, which include additional capabilities and options on iPadOS, or they can choose to remain on Apple's existing terms.Once these changes are available to users in the EU, the Core Technology Fee (CTF) will also be applicable to iPadOS apps downloaded through the App Store, Web Distribution, and/or alternative marketplaces. Notably, 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, ensuring consistency and fairness across platforms.