For freeware and small developers: Apple lowers the core technology fee

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Apple is relenting and fully exempting non-commercial apps from paying the so-called core technology fee if the developers use alternative app marketplaces in the European Union. Smaller developers who exceed certain revenue thresholds will be given more time and will now be phased into paying the full fee over a period of three years. The changes to the new terms and conditions first announced in January were announced by Apple on Thursday.

According to the iPhone manufacturer, the new changes in the EU are Apple's response to feedback from developers. In discussions online, smaller developers in particular were unsettled and put off by Apple's new set of rules, which are intended to take into account the gatekeeper status of iOS as part of the Digital Markets Act (DMA). Alternative marketplaces and other changes were introduced for iPhone owners with iOS 17.4.

Surprise successes should no longer be expensive

Apple only collects the core technology fee from one million initial installations per year, whereby the first update of an already installed app per year also counts. For smaller developers or even developers of free apps, however, the new terms and conditions represent a major cost risk. A surprise success with millions of downloads in one fell swoop threatened to drive developers to ruin – especially if there was no revenue at all.

This danger has now been largely averted with the change. Until now, Apple had taken the view that developers could remain with the old terms and conditions from the time. In that case, however, the alternative marketplaces would remain closed to them. Critics saw this as an attempt to make alternative distribution channels as unattractive as possible.

Apple: 99 percent do not pay any fees

The EU Commission, which recently called on Apple to open up iPadOS to alternative app stores within the next six months, did not play a role in the rule change, according to Apple. Apple's new rules were also viewed with skepticism in Brussels – although no final assessment has yet been made. Exceptions to the core technology levy have so far only been made for educational institutions, public authorities and non-profit organizations. Apple justifies the fee with the provision of development tools, services such as notarization and the infrastructure for processing the apps. It amounts to 50 cents per initial installation and year.

The circle of those who have to pay the core technology fee is small. 99 percent of developers are exempt from the fee because they are below the million mark for initial installations.

Who is covered by the new regulation

Students, hobby and other developers who offer free apps without any monetization and thus generate no revenue worldwide can in future declare their non-commercial status in order to benefit from the fee exemption. This declaration must be made annually.

Smaller developers who generate less than 10 million euros in revenue worldwide and whose app has never exceeded the threshold of one million first installations per year will qualify for the three-year transition period. This begins with the acceptance of the new terms and conditions

If the total turnover in the three-year period is less than 10 million euros per year, the levy is waived completely. Anyone with a turnover of between 10 and 50 million euros per year must pay the fee, up to a maximum of one million euros per year. Anyone with a turnover of more than 50 million euros per year must also pay the fee in full during the three-year period.

iPadOS will open in the fall

For iPadOS, Apple has announced that it will bring the new iOS features introduced in the EU to the tablet by the fall. Good news for developers: if users install the same app on both iOS and iPadOS, this will only count as one installation per year for the purposes of the core technology levy.

(mki)