Apple Tweaks Core Technology Fee for Apps Distributed Outside of the EU App Store

Apple announced today that it will be changing the way it collects the Core Technology Fee (CTF) on iOS apps distributed outside of the App Store in the EU. And the good news is that there are new conditions allowing developers to not to pay the €0.50 fee on each install after an app crosses one million first annual installs per year.

Apple’s CTF is part of the company’s new business terms for iOS apps in the European Union that developers need to accept to distribute their iOS apps on alternative app marketplaces or directly via the web. Many developers and companies have criticized the CTF as an anticompetitive tax on transactions that don’t go through Apple’s App Store. However, EU developers can still stick with the App Store’s current business terms where Apple takes a 30% cut on in-app pruchases.

“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,” Apple explained in an update on its Developer portal today. While the company believes that “the CTF aims to meet the needs of both users and developers,” it has also decided that nonprofit organizations, government entitles, and educational institutions approved for a fee waiver won’t need to pay the CTF. However, the company announced two more exceptions today.

First of all, developers who are not making any revenue from their apps in the EU won’t need to pay the CTF. “This condition is intended to give students, hobbyists, and other non-commercial developers an opportunity to create a popular app without paying the CTF,” the company explained.

The second exception is for small developers making less than €10 million in global annual business revenue. These developers will get a 3-year on-ramp period during which they won’t need to pay the CTF, even if their app crosses the one million first annual installs threshold 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,” Apple explained.

While these additional conditions for paying the CTF for apps distributed in the EU are better than nothing, Tim Sweeney, the CEO of Epic Games and one of the biggest critics of Apple’s DMA-related changes was not convinced. “Apple is tweaking its anticompetitive “core technology” junk fee – while still demanding a cut of transactions they have nothing to do with, from apps distributed through channels they have nothing to do with, in violation of EU law. Another rotten, bad-faith move,” the exec posted on X.

Back in March, EU antitrust chief Margrethe Vestager suggested that the EU Commission had yet to determine whether Apple’s Core Technology Fee was compliant with the Digital Markets Act. Earlier this week, the EU regulator also gave Apple six months to make iPadOS DMA-compliant. This means that iPad users in the EU will also be able to download apps from other sources than the App Store before the end of the year.