Apple's EU Core Technology Fee Could Bankrupt Freemium App Developers

App developers in the European Union who choose to opt in to Apple's new business terms must pay an €0.50 "Core Technology Fee" or CTF for every app install over one million installs, a model that has the potential to bankrupt free or freemium app developers.

app store fees eu
Apple does not charge for the first one million "first annual installs" per iOS account each year, but after that, developers will begin racking up charges. A free or freemium app that goes "viral" and is downloaded more than one million times could be forced to pay astronomical fees, as demonstrated in estimates shared by developer Steve Troughton-Smith.

Under Apple's new business terms, a free or freemium app that gets two million annual "first installs" would need to pay an estimated $45,290 in fees per month according to Apple's fee calculator, or more than half a million dollars per year, even if no money is earned.

That's an unsustainable model for free apps, and freemium apps would need to be earning at least €0.50 per user to break even with the fee. A freemium app with thousands of installs from non-paying users could end up owing far more than is made. Developers will likely need to charge up front to ensure their apps make enough money to pay the CTF, as offering a free-to-download app could be risky if downloads exceed 1 million.

Free and freemium app developers can, however, choose to stick with Apple's current App Store business terms instead of opting for the new terms. In that situation, nothing would change, and app developers would continue to pay a 15 to 30 percent commission to Apple.

The €0.50 CTF applies to apps distributed both through the ‌App Store‌ and through alternative app stores if developers choose the new business terms. With the ‌App Store‌, developers are charged the €0.50 fee and must pay a 10 to 17 percent commission to Apple. With an alternative app store, there is no commission. Fees can be estimated for the existing terms and the new terms through a dedicated calculator that Apple has provided to developers.

Here's a breakdown of the available options:

  • Current App Store Agreement - Developers pay Apple a 15 to 30 percent commission. Under one million in revenue is a 15 percent commission through the ‌App Store‌ Small Business Program, over $1 million results in a 30 percent commission. Subscriptions require a 30 percent commission for the first year, and a 15 percent commission for the second year and beyond.
  • New terms, App Store distribution - Commission drops to 17 percent from 30 percent, and 10 percent from 15 percent. There is an additional fee of 3 percent for using Apple's payment system, so the commission would be between 13 and 20 percent for a developer that opts for the new rules and uses in-app purchases. The 3 percent fee does not apply for developers who use alternative payment systems. Developers must also pay €0.50 per app install per user each year after 1 million app installs.
  • New terms, alternative app store distribution - No commission, but developers must pay €0.50 per app install per user annually after 1 million app installs.

According to Apple, the CTF is applied for the first annual install, which is the first time an app is installed by an account in the EU in a 12-month period. After the first annual install, the app can be installed any number of times by the same account for the next 12 months with no charge.

Apple is waiving the fee for nonprofit organizations, accredited educational institutions, and government entities that are approved for a fee waiver.

Apple's Core Technology Fee could also be prohibitively expensive for apps like Spotify that have millions of users. An app that makes $10 million in sales through the ‌App Store‌ with 10 million "first installs" (aka, a 0.99 price) will need to pay Apple over $500k per month.

The EU app ecosystem changes are included in iOS 17.4, and developers who opt for Apple's new system will need to start paying fees starting in March when the update launches to the public.

Top Rated Comments

mthomas184 Avatar
4 weeks ago
If you’re app is free, why the hell would you list it in a side loaded store knowing the fees.

This is a non issue.
Score: 75 Votes (Like | Disagree)
BC2009 Avatar
4 weeks ago

We all know that the new terms will be mandatory at the point of your annual account renewal.
I am pretty sure the new terms are there to deter people from using alternative app stores. Apple is telling the EU that the work they do to support app developers is not a charity and that adding value to the App Store (and revenue for non-free apps) is where Apple recuperates the costs of the investment they make into Xcode and all the API's (xxxKit's) they provide to developers.

I still recall when game consoles would take like 60% in licensing fees for every cartridge sold. Nobody cried about Nintendo or Sony or Microsoft doing that. How about when Amazon was taking like 95% from independent authors selling books through them and only paid them after they sold a minimum number of books? Yet Apple was the one who DOJ went after in eBooks.

There is nothing wrong with Apple taking the fees they do to provide development tools and distribution. The problem with the App Store that needs fixing is the horribly inconsistent and seemingly arbitrary review process for apps -- you would think Apple's executives would have fixed that by now.
Score: 70 Votes (Like | Disagree)
truthsteve Avatar
4 weeks ago
well no, you can use the old agreement. just don't switch to the new one.

clickbait title.
Score: 58 Votes (Like | Disagree)
Marshall73 Avatar
4 weeks ago
Ah, the greed never ends. Apple looked at what unity wanted to do then said “hold my beer”
Score: 42 Votes (Like | Disagree)
Shirasaki Avatar
4 weeks ago

I am pretty sure the new terms are there to deter people from using alternative app stores.
Not just deter, but with full intention to DOA it. Apple is full on middle fingering EU.
Score: 34 Votes (Like | Disagree)
DFZD Avatar
4 weeks ago
You don’t build a 3 Trillion Empire by sharing your lunch with other kids.
Score: 34 Votes (Like | Disagree)

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