Apple is tweaking how it applies a new fee that could affect iOS developers in the European Union as it continues to shape its approach to the Digital Markets Act (DMA): Free app developers will be able to avoid the fee completely under the changes announced Thursday, which take effect today, while other developers who earn below a certain revenue threshold will get more time before they have to pay Apple the fee.
The Core Technology Fee (CTF) remains eligible for iOS developers in the region, as Apple continues to offer its standard business terms, but those who want to receive new rights that the DMA requires Apple to offer — such as allowing sideloading apps , third-party app stores, and support for Apple’s own alternative payment technology — must agree to the set of business terms that comprise the CTF (as Apple calls it).
The fee remains under scrutiny in the region where the commission, which enforces DMA for Apple and other gatekeepers — and opened its first investigations, including Apple, in March — is actively investigating whether the mechanism allows the iPhone maker to avoid obligations of to open the App Store to competition, such as from third-party app stores. However, the EU has so far not stopped Apple from charging a fee.
Apple said it is making changes to the CTF in response to feedback from thousands of developers. Some expressed concern about the risk of punitive fees for those offering free non-commercial apps or small developers who end up with a surprise on their hands. An app that goes viral and surpasses the first 1 million annual installs mark that Apple had already set before charging could end up owing the tech giant a lot of money, as the fee costs €0.50 for each first annual installation annually after the 1 million mark.
In the information provided for developers, Apple said the no-charge tweak for free apps is intended to give “students, hobbyists and other non-commercial developers the opportunity to create a popular app without paying CTF.” Developers will need to certify their non-commercial status annually to Apple to continue to qualify for the fee waiver. (Note: Government agencies and accredited educational institutions were already exempt from paying the CTF, provided they met Apple’s criteria.)
Apple said the second change it has announced aims to give small developers who win a successful app more time to scale their business. Developers earning less than €10 million in global annual business revenue will get a three-year “free ramp to CTF,” according to its developer materials.
“Within this 3-year period, if a small developer who has not previously exceeded one million first annual installs exceeds the threshold for the first time, they will not pay the CTF, even if they continue to exceed one million first annual installs by during this period,” Apple wrote in a suspension. “If a small developer grows to earn between €10 million and €50 million in global revenue within the three-year ramp period, it will start paying the CTF after the first million annual installs up to a cap of €1 million per year.”
Earlier this week, the EU announced that Apple’s tablet operating system platform iPadOS would also soon fall under the DMA – 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 implemented in iOS will also be implemented in iPadOS later this fall. (According to the DMA, it has six months to meet the iPadOS compliance deadline.)
“Developers can choose to adopt the EU Alternative Business Terms for Apps that will include these additional features and options in iPadOS, or stick with Apple’s existing terms,” he 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 markets,” it also notes, adding: “Users who install the same app on both iOS and iPadOS within a 12-month period will generate only one first annual install for that app.”
