Apple offers small developers more ways to bypass its app store alternative tax

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

To qualify, Apple says free apps must have “no revenue of any kind,” including money from physical or digital goods, as well as advertising. “This condition is intended to give students, hobbyists and other non-commercial developers the opportunity to create a popular app without paying the CTF,” Apple writes in the update.

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

Apple will not charge the small developer CTF even if they reach 1 million annual installs within the three-year period and continue to exceed it. However, if a developer achieves global revenue between €10 million and €50 million during that period, Apple says it will start charging after “one million first annual installs, up to a cap of €1 million per year.”

The CTF is part of new commercial terms that 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 would not be able to pay the fee if their app suddenly became popular.

Not everyone is happy with the new exemptions. Epic CEO Tim Sweeney calls the update “another rotten, bad-faith move” in a post on X. “Apple is adjusting its anti-competitive ‘core technology’ tax – while demanding a reduction in transactions it has nothing to do with, from apps distributed through channels it has nothing to do with, in violation of EU legislation,” writes Sweeney.

Additionally, Apple announced that it will apply its new commercial terms to iPad apps “later this fall.” The EU designated iPadOS as the guardian of the DMA this week, giving Apple six months to comply. “Developers can choose to adopt the EU Alternative Commercial Terms for Apps, which will include these additional features and options in iPadOS, or remain under Apple’s existing terms,” notes Apple.