Image: © Tobias Arhelger/Stock.adobe.com
Ahead of its quarterly earnings report later today, Apple has shared two additional conditions under which its core technology fee need not be paid in the EU.
Apple is making some major changes to its core technology fee that it charges developers with apps in the EU by making it easier for smaller apps to exist without worrying about finances.
In an update shared with SiliconRepublic.com today (2 May), Apple said that it is introducing two new conditions under which the core technology fee, or CTF, will not be required in the EU amid concerns that the charges risked smaller developers going bankrupt.
Since Apple revealed plans to charge developers the €0.50 fee for each first annual install over 1m in the past 12 months, there have been concerns around how the new EU App Store business terms may affect smaller developers and students whose free iOS apps suddenly go viral.
Currently, only developers who reach such significant scale pay the CTF, while nonprofit organisations, government entities and educational institutions approved for a fee waiver don’t.
Now, Apple has shared two additional conditions under which the CTF need not be paid: when a developer has no revenue and small developers who adopt specific alternative business terms.
“No CTF is required if a developer has no revenue whatsoever. This includes creating a free app without monetisation that is not related to revenue of any kind (physical, digital, advertising, or otherwise),” Apple wrote in a statement.
The condition is intended to give students, hobbyists and other non-commercial developers an opportunity to create a popular app without paying the core technology fees.
What does this mean?
For small developers (who have less than €10m in global annual business revenue) who adopt alternative business terms, Apple will provide a three-year free on-ramp to the CTF to help them continue to innovate and grow their business.
Apple clarified that, within this three-year period, if a small developer that hasn’t previously exceeded 1m first annual installs crosses the threshold for the first time, they won’t pay the CTF. This is true even if they continue to exceed 1m first annual installs during that time.
However, if a small developer grows to earn global revenue between €10m and €50m within the three-year on-ramp period, Apple said they will start to pay the CTF after 1m first annual installs up to a cap of €1m per year.
“The CTF is an element of the alternative business terms in the EU that reflects the value Apple provides developers through tools, technologies and services that enable them to build and share innovative apps,” the company wrote. “We believe anyone with a good idea and the ingenuity to bring it to life should have the opportunity to offer their app to the world.”
Following the designation of iPadOS as a gatekeeper under the Digital Markets Act, Apple also said it will bring its recent iOS changes for apps in the EU to iPadOS later this year.
The company said that 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.
“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,” Apple said.
“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.”
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