Apple responded to protests about the Core Technology Fee it charges European developers every time one of their applications is installed. It removed the requirement for apps that generate “no revenue whatsoever.”
Currently, the CTF is only charged in the EU, but it has the potential to expand globally so prudent developers should pay attention to any changes no matter where they live.
Apple Core Technology Fee: TANSTAAFL
Apple charges developers a 30% commission on applications sold through the iPhone App Store. But that means Facebook, Instagram, YouTube and other advertising-supported applications get a free ride, even though they generate billions in revenue for Meta, Google, etc.
Apple’s answer is the Core Technology Fee, which is says “reflects the value Apple provides developers through tools, technologies, and services that enable them to build and share innovative apps.”
The fee requires developers in the EU to pay Apple half a euro each time an application is installed on an iPhone, no matter what the cost of the app is.
Freeware get a pass from the CTF
Initially, only apps that generated less than 1 million installs a year were exempted. But there were complaints that some small developer could release a piece of freeware that goes viral and suddenly they owe Apple millions of Euros for software that generates no money.
On Thursday, the iPhone maker changed the terms of the Core Technology Fee. “No CTF is required if a developer has no revenue whatsoever,” is the new rule.
This means that a small hobbiest developer can release a freeware app and not have to pay the CTF. But they do have to pay it if they put ads in the app — that’s revenue.
iPhone software that is essentially a catalog designed to sell products outside the App Store also have to pay the fee.
Onramping Apple Core Technology Fee
Another change to the terms of the CTF gives new small businesses a three-year pass on paying the fee. If the business generates less than €10 million in revenue, they don’t have to pay the fee even if they exceed 1 million installs a year.
But if they break past the €10 million in revenue mark, the fee kicks in up to a cap of €1 million per year.
And, no matter what, after three years the developers must to pay the fee if they generate more than 1 million installs a year.
CTF reach could easily expand globally
As noted, the Core Technology Fee is currently only being changed in the European Union. But that could be a test market with Apple planning to take it global.
iPhone sales are no longer growing at the rate they used to, and Cupertino surely wants new sources of revenue. Making Meta, Google, Netflix and others pay to be in the App Store would bring a rush of cash to Apple coffers.
