Apple has today announced that it is making further tweaks to its EU App Store terms, specifically regarding its controversial Core Technology Fee charged to developers under the new terms. Perhaps more excitingly, it has also announced that recent iOS changes made in the EU are coming to iPadOS later this fall.
Apple has introduced alternative app marketplaces and web distribution (sideloading) to iPhone in the EU. However, the new business terms come burdened with a ‘Core Technology Fee’ (CTF), which charges users a €0.50 payment for each first annual install of an app over one million in the past 12 months. Put simply, a developer under the new rules who incurs 2 million app downloads in a year would be on the hook for €500,000. In an announcement Thursday, Apple has confirmed two additional conditions under which payment of the Core Technology Fee is not required. Apple says this will ensure “Only developers who reach significant scale (more than one million first annual installs per year in the EU) pay the CTF.”
Firstly, Apple says no CTF will be required for any developer who doesn’t earn revenue, having created an app monetization of any kind (physical, digital, advertising, or otherwise). This means that freemium apps that offer in-app purchases or serve adverts, will not be excluded. Apple says the move will give “students, hobbyists, and other non-commercial developers an opportunity to create a popular app without paying the CTF.”
Secondly, Apple is creating a CTF “on-ramp period” for developers who earn less than €10 million in global annual business revenue. “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. 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.” To qualify for these terms, developers must declare their revenue annually.
EU changes coming to iPad
Apple also announced this week that, in response to the EU’s designation of iPadOS as a gatekeeper platform under the Digital Markets Act, the various changes it has made to iOS in the EU are also coming to iPadOS later this fall. This means that web distribution and alternative app marketplaces are all coming to Apple’s best iPads. The company did not provide any further specifics as to the time frame. Regarding the CTF, Apple says that this will apply to iPadOS just as it does to iOS, but that if a user downloads the same app on iPhone and iPad within a 12-month period, this will only count as one first annual install towards the all-important 1 million threshold, rather than two.
The further changes and tweaks to the terms of the new EU App Store rules appear to reflect growing feedback from developers regarding the nature of the CTF, with Apple repeatedly tweaking and altering its plan since publicly unveiling it in January. The European Commission is already investigating Apple’s CTF. Competition Chief Margrethe Vestager remarked in March "There are things that we take a keen interest in, for instance, if the new Apple fee structure will de facto not make it in any way attractive to use the benefits of the DMA. That kind of thing is what we will be investigating.”
