Under the new EU regulations, Apple’s Gravity Counterattack App will charge a “core technology fee” of 0.5 euros each time it is downloaded

2024-01-28 10:00:33

EU application developers, if they accept Apple’s latest business terms, will need to pay a Core Technology Fee of €0.50 (approximately HK$4.24) per installation for each application with more than one million installations. Foreign media pointed out that this operating model may put free application developers at risk of bankruptcy.

According to Apple Insider, Apple will not charge developers for the first million user installations. But after that, developers will start accruing fees. If a free app is downloaded more than 1 million times, a “core technology fee” of €0.50 per subsequent install will be charged. According to estimates, even if the App does not bring revenue to the developer, a free app with two million “first installations” per year will cost about US$45,290 (approximately HK$354,000) per month. Free apps need to earn at least €0.50 per user to break even. If thousands of users download a free app and those users don’t pay, the developer could owe more money than it makes.

However, developers of free apps can choose to keep Apple’s current App Store business terms instead of choosing new terms. In this case, nothing will change and app developers will continue to pay Apple a 15% to 30% commission.

EU application developers will have three options to choose from in the future:

1) Maintain the current App Store agreement: developers need to pay Apple a commission of 15% to 30%. Commissions through the ‌App Store‌ Small Business Program are 15% for revenue under $1 million and 30% for revenue over $1 million. Subscriptions are subject to a 30% commission for the first year and 15% for the second year and beyond.

2) Accept the new terms and distribute the application through the App Store: if the commission is 30%, it will be reduced to 17%, if it is 15%, it will be reduced to 10%. There is also an additional 3% fee for using Apple’s payments system, so developers who choose the new rules and use in-app purchases will pay commissions of 13% to 20%. After the app is downloaded and installed more than 1 million times a year, each subsequent “first install” will cost €0.50.

3) Accept the new terms and have the app distributed by another app store: no commission is required, but €0.50 will be charged for each “first install” after the app is downloaded and installed more than 1 million times per year.

EU app ecosystem changes will be included in iOS 17.4, and developers who opt into Apple’s new terms will need to start paying when the public version of the update launches in March.

Under the App Store’s new fee structure for Europe, if you make $10 million in sales, Apple’s cut is $6.2 million annually.

Assuming you have no operating costs or salaries, your take home amount:
$2 million after tax—or 20% of your sales

I will never launch an app in Europe. pic.twitter.com/MUCxVHcHOo

— Nikita Bier (@nikitabier) January 25, 2024