Apple gives small developers more ways around its alternative app store tax

Apple is exempting more developers from the Core Technology Fee (CTF) it introduced in the European Union. In an update on Thursday, Apple announced that developers of free apps without monetization won’t have to pay the new fee.

To qualify, Apple says free apps must not have “revenue of any kind,” including money made from physical or digital goods, as well as advertising. “This condition is intended to give students, hobbyists, and other non-commercial developers an opportunity to create a popular app without paying the CTF,” Apple writes in the update.

The company also says small developers with less than €10 million in global annual business revenue will receive a three-year free “on-ramp” to the CTF “to help them create innovative apps and rapidly grow their business.”

Apple won’t charge the small developer the CTF even if they hit 1 million annual installs in the three-year window and continue to exceed it. However, if a developer reaches a global revenue between €10 million and €50 million during this time, Apple says it will start charging them after “one million first annual installs up to a cap of €1 million per year.”

The CTF is part of the new business terms Apple introduced in the EU in January to comply with the Digital Markets Act. Under the new terms, developers who want to distribute their apps on third-party app marketplaces and use alternative payment options must pay 50 euro cents for each annual app install after 1 million downloads. This raised concerns among small developers who feared they couldn’t afford the fee if their app suddenly became popular.

Not everyone is happy about the new exemptions. Epic CEO Tim Sweeney calls the update “another rotten, bad-faith move” in a post on X. “Apple is tweaking its anticompetitive ‘core technology’ junk fee — while still demanding a cut of transactions they have nothing to do with, from apps distributed through channels they have nothing to do with, in violation of EU law,” Sweeney writes.

Additionally, Apple announced that it will apply its new business terms to iPad apps “later this fall.” The EU designated iPadOS as a gatekeeper under the DMA this week, giving Apple six months to comply. “Developers can choose to adopt the Alternative Business Terms for Apps in the EU that will include these additional capabilities and options on iPadOS, or stay on Apple’s existing terms,” Apple notes.