As it continues to calibrate its approach to the European Union’s Digital Markets Act (DMA), Apple is adjusting how it imposes a new tax that may impact iOS developers in the EU: Changes outlined Thursday would allow free app developers to completely avoid the cost; other developers making less than a certain income level will have more time before they must pay Apple the fee.
For iOS developers in the region, the core technology fee (CTF) is still opt-in as Apple maintains its standard business terms. However, those wishing to take advantage of new entitlements the DMA has mandated Apple to provide—such as supporting alternative payment technology than Apple’s own, sideloading of apps, and third-party app stores—must accept the set of business terms that include the CTF (as Apple refers to it).
In the region where the Commission, which enforces the DMA on Apple and other gatekeepers and launched its first investigations, including on Apple, in March, is actively investigating whether the mechanism is enabling the iPhone maker to avoid its obligations to open up the App Store to competition, such as from third-party app stores, the fee is still under scrutiny. The EU hasn’t, however, stopped Apple from collecting a charge so far.
In response to input from thousands of developers, Apple claimed to be revising the CTF. Some have voiced worry that the cost might penalize small developers who wind up with an unexpected hit or those who provide free non-commercial products. Since the price is €0.50 for each initial yearly install beyond the 1 million barrier, an app that becomes popular and surpasses the 1 million first annual installations Apple had previously set before the fee starts might wind up paying the tech giant a lot of money.
The no-fee-for-free-apps modification, according to documents Apple sent to developers, aims to give “students, hobbyists, and other non-commercial developers an opportunity to create a popular app without paying the CTF.” To maintain their eligibility for the fee exemption, developers will have to annually confirm to Apple their non-commercial status. Government agencies and recognized educational institutions, as long as they meet Apple’s requirements, are already exempt from paying the CTF.
According to Apple, the second adjustment aims to give small developers who land popular software more time to grow their company. As the developer papers describe it, developers with a worldwide yearly company turnover of less than €10 million would receive a three-year “free on-ramp to the CTF.”
“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,” Apple said in a blog post. “If a small developer will begin paying the CTF after one million first annual installs up to a cap of €1 million per year if they grow to earn global revenue between €10 million and €50 million within the 3-year on-ramp period.”
The EU said earlier this week that iPadOS, Apple’s tablet operating system, will soon be subject to the DMA as well, giving the firm six months to make sure it follows the same regulations that now apply to iOS, the App Store, and Apple’s Safari browser.
Apple announced today that it will also introduce any DMA-related updates to iPadOS later this autumn. (The DMA allows it six months to reach the iPadOS compliance date.)
In the blog post, it said, “Developers can choose to stay on Apple’s existing terms or adopt the Alternative Business Terms for Apps in the EU that will include these additional capabilities and options on iPadOS.”
It further said, “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.” 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.
