Apple Announces New Exemptions from Core Technology Fee in the European Union
Apple has revealed new exemptions from its Core Technology Fee (CTF) in the European Union. This move comes in response to the regulations outlined in the Digital Markets Act, which aims to create a level playing field for developers and promote fair competition.
Developers of free apps with no revenue, including advertising, are now exempt from the CTF. Additionally, small developers with less than €10 million in global annual business revenue will receive a three-year free pass to the CTF. Notably, even if small developers exceed 1 million annual installs in the three-year period, Apple will not charge them for the CTF. However, Epic CEO Tim Sweeney has criticized these new exemptions, referring to it as a "rotten, bad-faith move."
Furthermore, Apple has announced that its new business terms for EU app distribution will apply to iPad apps later this fall, aligning with the EU's regulations.
Key Takeaways
- Apple exempts free app developers without monetization from Core Technology Fee (CTF) in the EU.
- Small developers with less than €10 million global revenue get a 3-year free "on-ramp" to CTF.
- Apple won't charge CTF to small developers even if they exceed 1 million annual installs in 3 years.
- Apple's new business terms for EU app distribution now apply to iPad apps, starting this fall.
- Epic CEO Tim Sweeney criticizes Apple's CTF changes, citing EU law violation concerns.
Analysis
This market shift by Apple is a strategic response to comply with the European Union's Digital Markets Act, influencing third-party app marketplaces and alternative payment options. The decision to exempt free app developers and provide a three-year reprieve from the Core Technology Fee (CTF) could have financial implications for Apple. While smaller developers may benefit from these changes, larger entities such as Epic Games, with earnings surpassing €10 million, may still encounter fees. Tim Sweeney's opposition to these amendments underscores concerns regarding EU law violations. This may result in legal disputes and potential alterations to the Digital Markets Act, impacting EU countries and developers, while potentially necessitating adjustments for tech companies worldwide.
Did You Know?
- Core Technology Fee (CTF): The Core Technology Fee is charged by Apple to developers who wish to distribute their apps on the App Store in the European Union. It involves a 50 euro cents charge for each annual app install after 1 million downloads, introduced to fulfill the Digital Markets Act's requirements.
- Digital Markets Act: This regulation, introduced by the European Union, aims to foster fair competition in the digital marketplace. Large digital companies, including Apple, are obligated to ensure that smaller competitors are not unfairly disadvantaged. The legislation imposes payment requirements for alternative payment options on third-party app marketplaces and introduces transparency and interoperability standards for major digital companies.
- Epic CEO Tim Sweeney's criticism: Tim Sweeney, CEO of Epic Games, has been vocal in opposing Apple's App Store policies. Sweeney has expressed disapproval of Apple's new exemptions to the Core Technology Fee, labeling it a "rotten, bad-faith move." He contends that these exemptions still violate EU law as they exclusively cater to small developers, and not larger corporations. Sweeney previously filed a lawsuit against Apple over its App Store regulations.