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

[Skyscraperfan]

And you know that the $99/yr developer fee doesn’t cover all the development costs of iOS since that can be the cost of a simple iOS app, while iOS is much bigger.

The high price of iPhones should cover all development costs of iOS. iOS is not really free. You pay for it and for all future updates with the price of the iPhone.

Both sides profit from the existence of the Developer Program. Developers get a platform to publish the apps. Apple gets a lot of apps for its platform. Without those developers Apple would have to create all those apps on its own. So even without any fees both sides would profit a lot from that deals. Apple just uses its market power though to squeeze money out of the weaker side of the deal.

 

[herbius]

Publishers of alternative app stores need to pay the €0.5 platform fee from the very first download without it being waived for the first million users.

I made this same mistake at first. Alternate app stores are not charged, developers are charged the platform fee in exchange for access to the technology and IP (APIs, notarisation, push notifications ect.) and the charge is the same for Apple's own App Store.

As I said, the question will be if waiving the fee for developers for the first 1 million downloads is unfair to alternate app stores or not, not the fee itself.

 

[Zest28]

Of course the Developer Platform costs a lot of money, but apps are a very important part of the iPhone and iPad experience. So the costs of the Developer Platform and all those servers behind it are a part of the development costs of iPhones and iPads. Customers pay a high price for those devices.

Apple profits a lot from the Developer Platform. Without it Apple would have to create all those apps themselves. That sounds like an impossible task. If both sides profit from that deal, it seems unfair if one side charges the other side a ridiculous amount of money just because it can.

50 Cents per year does not seem a lot, but let's be honest: We have tons of apps on our phones and only use a fraction of them. There are apps that we did not use at all since we installed them, but under the new terms the developers would have to pay 50 Cents per year to Apple anyway.

And what about free apps that were written by enthusiasts without any intention to monetize them? Will those be forced to either stay in the official App Store or show ads to its users to pay for the fees?

The important iPhone apps are free and don’t pay anything to Apple (Uber, NetFlix, Whatsapp, TikTok, …)

And Apple their approach is fair because it is impossible to know what the earnings are of developers outside of the App Store, the number of installs is a reliable number.

You know EU developers will cheat with their earnings to try pay less to Apple. The number of installs, Apple can easily track and charge money on it.

 

[Unami]

I wonder why they are f****** around like this. It's pretty clear that this is in spite of the EU-decisions regarding fair competition, and that it will not fly in the end. They are just annoying for the sake of it and projecting an image as if they are milking every possible penny from their users and developers. Which of course they have been doing for the longest time. But they were always good at selling themselves as innovative, user friendly, even adding something good to the world. Now it feels like they're riding the ******tification-train and don't care that they are losing their good reputation for short-term gains.

I mean, as a user, I'm even happy when apps are not freemium, trying to sell to me all the time. But this seems just to lead to more in-app subscriptions which as a user I like even less than constant advertising (and even lesser because I'm aware that they want to collect 17% for in app purchases for doing nothing - we already know that payment processing is 3% - so where does that 17% come from, compared to a one time purchase app that gets the same service - being available for download in the app store - for free)

 

[Puonti]

I made this same mistake at first. Alternate app stores are not charged...

Apple's developer website does indicate that alternative app marketplace operators are charged, and they don't get free first annual installs:

Developers of alternative app marketplaces will pay the Core Technology Fee for every first annual install of their app marketplace, including installs that occur before one million

 

[Zest28]

The high price of iPhones should cover all development costs of iOS. iOS is not really free. You pay for it and for all future updates with the price of the iPhone.

Both sides profit from the existence of the Developer Program. Developers get a platform to publish the apps. Apple gets a lot of apps for its platform. Without those developers Apple would have to create all those apps on its own. So even without any fees both sides would profit a lot from that deals. Apple just uses its market power though to squeeze money out of the weaker side of the deal.

Android phones can cost more than iPhone’s with way worse software support. So that is not it. iOS is financed by the in-app purchases, which is how Apple is able to support super old iPhone’s it no longer sells.

 

[cupcakes2000]

Android phones can cost more than iPhone’s with way worse software support. So that is not it. iOS is financed by the in-app purchases, which is how Apple is able to support super old iPhone’s it no longer sells.

Not that there is anything wrong with making a profit, but it’s more like how Apple have achieved becoming one of the richest companies the world has ever seen. It’s got very little to do with enabling them to ‘afford’ supporting older iPhones.

 

[Zest28]

Not that there is anything wrong with making a profit, but it’s more like how Apple have achieved becoming one of the richest companies the world has ever seen. It’s got very little to do with enabling them to ‘afford’ supporting older iPhones.

Without all this money Apple makes, Apple would not have been able to offer this premium user experience it provides.

And Apple became one of the richest company in the world, because it is Big Tech. Microsoft, Nvidia, Alphabet, Meta, and so on …. are all one of the biggest companies in the world in terms of $$$$.

Apple is simply in the right industry.

 

[Abazigal]

Android phones can cost more than iPhone’s with way worse software support. So that is not it. iOS is financed by the in-app purchases, which is how Apple is able to support super old iPhone’s it no longer sells.

I won’t say finance, more like incentivise. For example, I believe Apple is willing to support their iOS devices for so many years because they know these users will continue to buy apps and subscribe to services, thereby allowing Apple to make money even though they aren’t purchasing any newer hardware.

A lot of things are probably more interconnected than we realise.

 

[LeHoangDev]

Let's assume that the average user would buy an iPhone every year and migrates from his old iPhone to the newer one via Backup Recovery or something similar. To do this, you need to download the apps from the App Store. If I am not wrong, the backup doesn't save the App IPA file itself. So it should count as first annual installation.

Does this mean that the highest number of annual first installations happens on every iPhone release?
That would be insane. This would mean that the highest income of CTF is during the period when an iPhone is released.

 

[TracerAnalog]

There we go. Talking about malicious compliance, but worse. Who on earth can easily rack up $48k/mo as freemium app? Does that mean freemium microtransaction model will end as we know it?

The worst part is, iOS devs have no choice but to pay this fee, or suffer being pulled from App Store. And again, Apple doesn’t have to pay this fee themselves while racking up millions of individual install. Who knows how long the “current terms” will last?

If this is not anticompetitive behaviour, I don’t know what it is.

If I understand the new rules correctly, I have a different view. If you stay in the old system nothing changes. If you use an alternate App Store, you pay €0.50 once, killing off a number off free(mium) apps from outside the Apple ecosystem. Paid apps from outside the Apple Store using their own billing system now only have to pay this €0.50 instead of the 15-30%, and -nothing- for in app purchases. The fools that sign up for using an alternate App Store and their own billing, but stay in the Apple ecosystem will pay through their noses…

 

[hans1972]

Nice try Apple. The fee clearly violates the DMA regulation.

Apple has to try because they want money, but they'll be shot down in courts in no time.

The only winners here will be the lawyers.

View attachment 2341241

Regulation - 2022/1925 - EN - EUR-Lex

eur-lex.europa.eu

You need to read carefully. The free of charge refers to a dispute settlement mechanism.

Also, doesn't Section (?) 62 only applies to software application stores (see first sentence)?
Based on my interpretation it seems that nothing here applies to an app developer but only software application store developers.

 

[dannys1]

There we go. Talking about malicious compliance, but worse. Who on earth can easily rack up $48k/mo as freemium app? Does that mean freemium microtransaction model will end as we know it?

The worst part is, iOS devs have no choice but to pay this fee, or suffer being pulled from App Store. And again, Apple doesn’t have to pay this fee themselves while racking up millions of individual install. Who knows how long the “current terms” will last?

If this is not anticompetitive behaviour, I don’t know what it is.

What? I don't think you understand what you're comment on. This fee doesn't exist if they're on the app store - this is for people that want to use Apple's tools to compile and make their app and distribute it outside of the app store.

 

[Zest28]

I won’t say finance, more like incentivise. For example, I believe Apple is willing to support their iOS devices for so many years because they know these users will continue to buy apps and subscribe to services, thereby allowing Apple to make money even though they aren’t purchasing any newer hardware.

A lot of things are probably more interconnected than we realise.

Android phones also have in-app purchases so this is again not it.

However, iOS generates much more revenue from IAP compared to Android (iOS users spend more money). So Apple has more money to spend on developing and maintaining iOS.

 

[Mrkevinfinnerty]

I mean, if I were a developer, I could be happy to pay Apple 30% if it means I get to run a successful business that makes a decent amount of profit, while also recognising that the less Apple takes, the more I keep.

Going along this line of logic, there is no cut above 0% that would satisfy developers. Do you think game developers are happy paying Nintendo 30%, or do they just see it as another cost of doing business? Not like Nintendo really gives them any say in the matter beyond “take it or leave it”.

Fair or unfair has nothing to do with this. It’s really all about leverage, who has it, and what one can get away with.

I never said that you've made that up.

Apple are forcing people to use their store fior distribution under those circumstances its not really surprising that regulators are looking at it.

The App Store was on borrowed time once they started heavily competing in services.

EDIT:

I should add people make this all about the fees but thats only part of it. It is the restrictions that they put on third party devs that their own services aren't subject to

 

[Abazigal]

Android phones also have in-app purchases so this is again not it.

However, iOS generates much more revenue from IAP compared to Android (iOS users spend more money). So Apple has more money to spend on developing and maintaining iOS.

The problem with android phones is that the manufacturers don’t get a cut of app sales. All the money goes to Google.

 

[Zest28]

The problem with android phones is that the manufacturers don’t get a cut of app sales. All the money goes to Google.

And Google is not providing the same user experience as Apple does, while also being incentived to support old Android phones.

Google simply doesn’t generate the same type of money Apple does from the App Store, so they cannot maintain and develop Android on the same premium level Apple does.

 

[hans1972]

Except this fee is clearly a steering measure. As others have pointed out, it can create incentive structures that mean that Apple is steering developers to its own App Store and making it financially impossible to create alternative stores.

How is steering apps which generate no money for the application store going to hurt the application store owner?

DMA only says such restrictions/costs must be fair and balanced.

 

[hans1972]

Counterfactual: Apple announces that every macOS app install is subject to the same fee structure. You all support that just like you do for iOS? Closed, locked-down platforms are good? That's what you tech people think?

It's great having a closed, locked down system for very mobile devices.

For a personal computers, it's great to have a more open system but I do wish the only way to distribute applications on the Mac was the Mac App Store and that all software developers were forced by marked forces to have a Mac applications.

 

[SmugMaverick]

Yet you guys are perfectly happy with google now having virtually no Limits now and being the monopoly apple is being accused of.

I’m looking forward to the many people trying to download something and then completely dumbfounded when apple doesn’t help lol. You wanted this so I’m looking forward to seeing the consequences.

Much like beeper this will be hilarious.

You want android like features and openness on iOS then get a pixel and stop trying to make iOS what it never was meant to be. That’s my main problem.

That’s like me demanding android behave like iOS. It shouldn’t be legally forced to because it was never meant to be and more importantly it’s not like people don’t have a choice.

You choose to use iOS ans that means accepting it as it has been. I don’t use android for that very reason because it’s inferior and it doesn’t provide me anything I already get with iOS.

That’s Choice.

Nobody said anything about Google in this thread 🤣🤣

I own both pixel and iPhone already thanks and I enjoy both but your fear of side loading is hilarious and proof you’ve never left your Apple cage, you want Apple to reward your blind allegiance but they literally don’t care about you at all.

This won’t stand and they know it, it’s literally in EU law that this is not allowed and they’re just playing games. Pathetic from Apple tbh.

 

[hans1972]

The iPhone doesn't need massive marketshare to be successful, that's true, but I never said it needed high marketshare to be successful. I said that the iPhone would struggle to crack 10% without third party apps.

Thus by the logic that Third party apps get value from Apple therefore Apple entitled to 30% of revenue the same logic works for third party apps. Apple gets value from third party apps therefore third party apps are entitled to 30% of apple's iPhone revenue.

Any app developer is free to make such a suggestion to Apple and refuse to develop iOS apps if Apple refuse.

 

[Abazigal]

And Google is not providing the same user experience as Apple does, while also being incentived to support old Android phones.

Google simply doesn’t generate the same type of money Apple does from the App Store, so they cannot maintain and develop Android on the same premium level Apple does.

We are discussing two separate matters.

There is a strong financial incentive for Apple to support their devices for as long as they can, because there are numerous ways they can continue to earn from their user base. This is how Apple has been able to tackle the issue of longer upgrade cycles - via higher prices, more accessories and more services.

Android phones, on the other hand, become a financial liability the moment it’s sold, because they will never see another cent of earnings aside from that sliver of profit from that hardware sale.

How much or how little money Google makes from their App Store is irrelevant when they are not the hardware manufacturers and not the ones responsible for ensuring said devices are kept up to date. They can continue to release a new version of android every year, but they have no power to compel OEMs to keep their devices updated.

That’s why I am an Apple user through and through. The areas they are strong in (like software updates) happen to be the areas I so happen to care about.

 

[jdmachogg]

Freemium apps are cancer. Let them die

 

[Luis Ortega]

Not that there is anything wrong with making a profit, but it’s more like how Apple have achieved becoming one of the richest companies the world has ever seen.

Actually, they’ve been surpassed by Microsoft now.

 

[2540497]

Let's assume that the average user would buy an iPhone every year and migrates from his old iPhone to the newer one via Backup Recovery or something similar. To do this, you need to download the apps from the App Store. If I am not wrong, the backup doesn't save the App IPA file itself. So it should count as first annual installation.

Does this mean that the highest number of annual first installations happens on every iPhone release?
That would be insane. This would mean that the highest income of CTF is during the period when an iPhone is released.

That’s a very interesting point, didn’t consider that