Apple Working on Solution for EU Core Technology Fee Possibly Bankrupting Apps That Go Unexpectedly Viral

[Naraxus]

There is that constant elephant in the room. Apple is being singled out for behaviour that other companies have been getting away with for way longer (Nintendo was the one who pioneered the 30% cut; Steve Jobs merely took the cue for the iOS App Store).

There is no "elephant in the room". I've asked the following here many times but nobody has yet provided an answer.

Where can I get games/apps for my Nintendo Switch, Xbox or PS?

and

Where can I get apps for my iOS devices?

Apple is rightfully being singled out for having a monopoly on app distribution. Nintendo, Microsoft & Sony have no such monopoly.

 

[jakey rolling]

So again I ask you, how is Apple being compensated for "Apple's decade-plus of work on the iPhone/App Store, Xcode, APIs and SDKs, developer sessions, documentation, regulatory compliance, marketing..." if a developer sticks to the old terms and gives an app away for free? Is the annual developer fee enough under the old terms?

Pretty simple. They get compensated by selling billions of phones and iPads and millions of annual $99/yr developer subscriptions. Same way Microsoft gets compensated for providing all the development tools, APIs, and SDKs for their platforms.

 

[sw1tcher]

You keep saying this but repeatedly highlighting things that clearly do not support it. The fee includes access to resources, it does not cover the cost of providing those resources. It's like a Costco membership—you pay a nominal fee to get access to the warehouse but that fee doesn't cover the cost of everything inside.

You keep inserting "includes access to" when those three words are not written anywhere.

Why did Apple not put those words there? Because the annual developer fee includes those resources, not just access to them.

 

[timborama]

The app was unexpectedly downloaded more than 10 million times, and under Apple's new rules with Core Technology Fee, Testut said that would have cost $5 million euros, bankrupting his family.

Hmmm…. REMOVE THE APP or go bankrupt, choice is yours.

 

[MilaM]

My prediction: The EU will mandate, that App Store payment services have to be unbundled and the CTF will have to apply to all App Store apps as well. Then Apple will have to decide how high the CTF needs to be.

 

[sw1tcher]

Pretty simple. They get compensated by selling billions of phones and iPads and millions of annual $99/yr developer subscriptions. Same way Microsoft gets compensated for providing all the development tools, APIs, and SDKs for their platforms.

You know/understand that. I know/understand that.

But, apparently, jarman92 does not.

I'd also add that Apple gets compensated by selling billions of dollars worth of ad space each year on their App Store. That (and the sale of iDevices) more than offsets whatever the annual developer fee doesn't cover.

 

[Seoras]

The amount of money at stake here makes it very hard to come up with a good solution. If Apple's fee was not 30% but some smaller reasonable number 5% or 10%, they probably wouldn't be in this soup to begin with. Also they need to taper that fee as the revenue goes up. Kind of like how volume discounts work.

It's 15%. That's what they take from me. I'd be delighted if it was 30% because I'd be retiring at the end of this, VERY good year....

 

[trusso]

The only acceptable solution is to completely remove this anti-competitive junk fee.

Exactly.

Here's a thought, Apple: your "core technology" is really just the price you pay to ensure developers keep developing for your ecosystem and don't go elsewhere.

Developers can develop for almost any platform, but Apple can only sell its own hardware. Apple, you need developers more than they need you - and you know it, don't you?

 

[The_Gream]

Apple's developer fee has been $99 since long before the App Store existed.

Apple's compensation for its ecosystem is device sales and their highly lucrative profit margins; Apple always as been and remains a hardware vendor despite services making up an increasing share of its revenue. The iPhone/iPad would be nothing without its app ecosystem.

Though I agree with your statement, that is for the Apple of yesteryears. If Apple still relied on that model to maintain what they have today it would not meet the required financial balance.

Apple of yesteryears I like that person who sold surplus vegetables from their pickup truck. They did well and started expanding their production by adding greenhouses, nurseries and employees. The old way of making money selling from the back of their truck doesn’t work as well as it once did and will look for alternatives for sales and revenue streams (like selling to local grocery).

Apple has done that. And personally people talk about their margins, but they are not that bad. They run like a 20-50% margin which is standard for most retail. Furniture runs between like 200-1000% (especially if they assembled it)

 

[jarman92]

Only if a developer accepts the new terms.

Right. Which is why I said "Developers can accept the new terms and the CTF will apply[.]"

So again I ask you, how is Apple being compensated for "Apple's decade-plus of work on the iPhone/App Store, Xcode, APIs and SDKs, developer sessions, documentation, regulatory compliance, marketing..." if a developer sticks to the old terms and gives an app away for free?

In that case, Apple isn't being fully compensated. But under the pre-DMA terms, Apple makes up for it in volume—there are probably hundreds of thousands of registered developers who use Apple's resources and never pay Apple anything beyond the $99/year, but Apple makes up for that loss with the other developers who make a lot and pay Apple a lot.

 

[jarman92]

Exactly.

Here's a thought, Apple: your "core technology" is really just the price you pay to ensure developers keep developing for your ecosystem and don't go elsewhere.

Developers can develop for almost any platform, but Apple can only sell its own hardware. Apple, you need developers more than they need you - and you know it, don't you?

...is this satire?

 

[turbineseaplane]

.

 

[falainber]

No, it's not. Apple is not required to give a free all access pass to their platform. It costs money to develop a platform and SDKs.

You pay for it when you buy an iPhone. It's not like they sell them for $30. It is customary to charge the developers for SDK/IDE license not for every installation of the app developed with the tool. The number of installations depends on the developer talent and has very little to do with Apple. Apple should not benefit from someone else's creativity.

 

[turbineseaplane]

Apple had so many years to do something about this on their own.

It’s really a shame they’re being forced to do it, but they have only themselves to blame

What’s really crazy is I actually think they could compete quite well on the merits once they get that in their head and go in that direction

 

[jarman92]

You keep inserting "includes access to" when those three words are not written anywhere.

Why did Apple not put those words there? Because the annual developer fee includes those resources, not just access to them.

From Apple's developer site, which you yourself posted:

Join the Apple Developer Program to reach customers around the world on the App Store for iPhone, iPad, Mac, Apple Watch, and Apple TV. Membership includes all the tools, resources, and support you need to develop and distribute apps, >>> 🚨🚨🚨 *** including access to *** 🚨🚨🚨 <<< beta software, app services, testing tools, app analytics, and more.

Is that clear? Of course, those three words aren't strictly necessary, since the surrounding context (not to mention common sense) makes it obvious.

 

[thejadedmonkey]

That developer fee is only $99 because they had the commission bringing in the real compensation for providing this rich ecosystem.


They could‘ve also gone the Microsoft route, pulling a Visual Studio per seat licensing system for enterprise but they chose to only use IAP monetization to cover their bases.

That would at least make sense. You charge $$$$$ for large companies, and $ for individuals. The language is open source, the runtime is paid for by the consumer, and everyone is happy.

 

[jarman92]

You pay for it when you buy an iPhone. It's not like they sell them for $30. It is customary to charge the developers for SDK/IDE license not for every installation of the app developed with the tool. The number of installations depends on the developer talent and has very little to do with Apple. Apple should not benefit from someone else's creativity.

Yes I, as a consumer, pay Apple for the hardware that I purchase from Apple. My purchase provides me with an iPhone to use, it is not a subsidy so Spotify, Epic, et al. can market and sell their products to me for free.

 

[thejadedmonkey]

You keep saying this but repeatedly highlighting things that clearly do not support it. The fee includes access to resources, it does not cover the cost of providing those resources. It's like a Costco membership—you pay a nominal fee to get access to the warehouse but that fee doesn't cover the cost of everything inside.

So you want me to pay the 0.00001¢ it costs for bandwidth for the documentation? I'm not sure what you're getting at here.

 

[desslr]

Nobody is forcing developers to use the new terms!

Solution: Give new apps that go viral the grace period to revert to the old terms.

Problem solved.

Cheers

 

[Pezimak]

The only acceptable solution is to completely remove this anti-competitive junk fee.

In this case this a thousand times. I hope the EU actively investigate Apple over this and fine them heavily because they are basically taking the p*** and monetising for mass profit EU regulation. It is also designed to effectively block any developers from using other stores outside Apples own one for fear of owing Apple a hefty cheque. What Apple has come up with basically goes directly against the EU regulation and is the whole reason the regulation was made.
In this instance Apple deserves a huge fine IMO, 10% of global operating profits should do it.

 

[applepotato666]

Would you pay to download your banking apps, food delivery apps, Amazon, Google Maps, YouTube?

For Google Maps, honestly I would. Would quite literally be lost without it 😵‍💫

Which is offset by the ridiculously high price of iPhones and iPads. Also developers pay $100 yearly membership do they not?

Any developer who is not charging anything for their app should be allowed to distribute for free.

I agree fully, just not distributed on Apple's servers. If you're hosting elsewhere there's no reason for Apple to demand a piece of the pie, although they have a right to because, well, welcome to capitalism. The cost of the iPhone would have you believe that it includes your share of the cost of iOS development for the lifespan of the device. After all, they sell the device with the software installed on it. They are very overpriced devices. Apple has all the right to pull all tricks to defend their profits, but I also believe I have the right to do whatever I want with my device that I paid for, including downloading an .ipa file from the web and installing it, especially when I'm paying that much for it and fake, imposed limits are annoying to say the least.

 

[CarAnalogy]

No, it's not. Apple is not required to give a free all access pass to their platform. It costs money to develop a platform and SDKs.

Yes but for fifty years we have figured out ways to do that. This is the first time this particular scheme has been suggested. And if you watch the clip, even the person in charge of it now appears to be unsure that it's the right solution. He strongly suggested we are about to see changes to that policy.

 

[cupcakes2000]

What’s really crazy is I actually think they could compete quite well on the merits once they get that in their head and go in that direction

Absolutely. Apple could fit this into their well know elegant ecosystem and just blow everything else out of the water. But nope. They’re chucking all their toys out of the pram instead.

 

[Jamie0003]

Not sure where you're quoting from, but it is abundantly clear that the annual developer fee provides access to such resources but does not cover the cost to Apple of providing those resources. $99/year is a pittance and serves only to prevent spam and abuse of the system.



As already explained extensively, here and elsewhere, the CTF covers Apple's decade-plus of work on the iPhone/App Store, Xcode, APIs and SDKs, developer sessions, documentation, regulatory compliance, marketing...

Then why isn’t the fee a thing on the Mac?

 

[Unregistered 4U]

The solution:
Pay $99. That won’t break anyone (I’m sure whatever they’re using to code the app costs several multiples more than $99) and, if your app goes viral, YOU ARE COVERED! I can almost guarantee that your app WON’T go viral, but if it does one is in a better position under the Apple model. 100% of developers that have gotten rich on the App Store got rich (i.e. didn’t go bankrupt) with this model. Well, I mean if they DID go bankrupt or didn’t make a profit, it wasn’t because of Apple paying them 70% of a massive amount of money. Poor business dealings always factor into your ability to make money (looking at you, Spotify).

Bonus: Once you’ve raked in enough money to become the next Epic (not likely, but I’ll humor you), use that money to create your own store, then take your app off of Apple’s store.