Apple has made substantial revisions to its new 0.50 euro Core Technology Fee (CTF) in the European Union with the aim of preventing small, unexpected viral apps from facing financial difficulties. This decision follows concerns raised about the potential burden the fee could place on app developers.
The updated terms of the CTF primarily focus on exempting independent and small developers who do not generate any revenue from paying the fee. This includes students, hobbyists, and freeware app developers who offer their apps for free and do not earn any money. However, developers are required to declare their non-commercial status annually, and in order to maintain this status, they should not generate any revenue from their app products within the App Store.
Furthermore, Apple has implemented a three-year on-ramping process for small developers to address concerns about the CTF resulting in excessive fees for unexpectedly popular apps. The three-year period begins when a developer agrees to the new App Store business terms, during which time, if an app surpasses the one million annual install threshold that triggers the CTF, the fee will not be charged if the developer’s global business revenue is less than 10 million euros. Additionally, if the developer’s global business revenue falls between 10 million and 50 million euros, the fee is capped at one million euros per year for a three-year period.
However, if a developer’s business revenue exceeds 50 million euros, the benefits of the ramp-up period no longer apply, and the full CTF must be paid. Subsequently, after the three-year period, developers will be required to pay for each first annual install following the initial one million first annual installs per year.
It is important to note that the ramp-up period is only available to small developers who have not exceeded one million first annual installs previously, and it is calculated based on global business revenue rather than App Store revenue. According to Apple, 99 percent of developers will not be subject to the CTF initially, and the new ramp-up period aims to provide small developers with more time to grow their businesses before having to pay any fees.
These changes were prompted by a discussion between developer Riley Testut and Apple officials during a workshop on the Digital Markets Act. Testut raised concerns about the financial implications of an unexpectedly viral app incurring substantial fees for a young developer. In response, Apple’s VP of regulatory law, Kyle Andeers, emphasized the company’s commitment to fostering innovation and stated that the updated CTF terms would prevent free apps from being burdened with exorbitant fees.
The CTF adjustments only apply to apps that have opted in to the new App Store business terms in the European Union. Additionally, apps in the EU now have the option to be distributed through alternative app stores and developer websites, reducing their reliance on the App Store.
For further information on the changes to the CTF, Apple has updated its CTF support page with detailed information about the revised terms.