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

[stereotype]

People don't realize how big Apples server farm is just to support this stuff. Things like continuity where an App you open on your phone shows up on your laptop or your iPad with no work, requires very large complex backend state. No one, not even Epic games, has the capacity to support billions of devices doing this. Or app downloads. There are some things that only Apple and Google have the scale to do.

Do you know how engrained the App Store and Apple backends are? Entitlement management, permissions management, build support, updates, apps that work on iPad/macOS. All that has to be broken to support a 3rd party app store. Plus apps distributed through a 3rd party would have to be written differently in a lot of ways to disable CloudKit. Even things like hardware encryption for iCloud keys have to be handled differently. I don't want someone like Epic having any of this, I don't trust them at all.

And developers should not be charged for not using any of that. I build my own backends, nothing in my Apps uses CloudKit. So don't offer CloudKit to non Apple App Store Apps if devs chose to publish their apps in other stores and we're fine!?

If you have an overnight success of an app on another app store, yes, you owe them money. However, you are using their backend infrastructure for a lot of things, so it's not "for nothing". You are paying for use of all the SDK's, the backend state in CloudKit, any data you may store on Apple's servers, support of the device, updates, etc. Hence it's called Core Technology Fee.

Or you can just share 15/30% of your revenue with them and move on without owing them.

When apps are not hosted by the App Store but 3rd party stores host them themselves (also updates), why is this an argument? I'm already paying 99€ per year for the SDKs, all the other services aren't required for apps in 3rd party stores. I'd understand if you'd argue that 99€ a year don't cover the costs of developing the main SDK costs (I still don't agree with that as I think that's already covered in the price of the iPhone the consumer paid), but all these services shouldn't matter if I chose to publish somewhere else without using any of that.

As a dev, no thanks! I don't have any desire to build for Android and I don't want to have to build my apps 2 different ways to support this. This is ruining a perfectly good, functioning, profitable for everyone ecosystem. Devs make **** loads of money off the Apple App Store and I don't see any reason to change other than Epic is a big greedy cry baby.

Talking about crying, I see you crying here about optional stuff you (rightfully) don't want to use. That's totally fine, but who are you to dictate other developers how they would like to publish their apps? You don't have to change a single thing, it's just about options. I really don't understand how one can argue about optional ways they don't have to use at all to approach things.

Btw. I'm totally fine with the 15% I'm paying Apple in the App Store, for me that has great value. But for others it might not be and it's about choice, as one company shouldn't be in a position to decide which and how people can install apps on their phone.

 

[Abazigal]

They will learn it the hard way.

As will everyone here thinking that Apple should just throw away everything that made their ecosystem unique and so successful in the first place.

 

[JPack]

Will they take the risk of compounding fines while the courts decide on the issue? The EU will fine 10% of global revenue for the first infraction and repeat infractions will be fined 20%. Can any company risk so much expecting a favorable verdict from the courts? I doubt it. Let us see who will blink first.

The EU case serves as a landmark case for guidance around the world.

EU, U.S., Japan, India are pursuing antitrust. More countries will join if they see EU success.

 

[smulji]

As will everyone here thinking that Apple should just throw away everything that made their ecosystem unique and so successful in the first place.

Way to twist people's words. No one here is thinking that.

Apple’s position here is ridiculous.

A) The ecosystem is locked down and curated to provide users with the best possible experience. The ‘Walled Garden’ exists to maintain a safe, consistent, well-designed UX for premium products.

B) Apple maintains the ecosystem and spends lots of time and money doing so, so of course they deserve a large cut of all commerce occurring within it.

Pick one.

You can’t have it both ways. A or B. Not both. They’re incompatible.

Either Apple needs to dramatically reduce its fees and turn its ecosystem into a perk of owning these premium devices, OR Apple needs to open up the ecosystem and stop taking a huge cut of everyone else’s commerce (especially commerce outside the App Store).

Apple wants to have its cake and eat it too. That won’t fly, and so they’re being slapped down.

Government intervention doesn’t help anyone here. But Apple’s business practices are garbage here. This is pure greed and rent-seeking, with Apple destroying its long-term brand equity for the sake of short-term profits.

Tim likes to proclaim that he supports Option A, while he simultaneously does everything he can to enact Option B.

Apple’s greed is getting out of control. See iCloud and SSD and RAM pricing for more examples of this. Slowly but surely, 90s Apple is reemerging - a million SKUs and ridiculous penny-pinching everywhere you look. They’re destroying their brand for the sake of short term profit.

 

[Abazigal]

Way to twist people's words. No one here is thinking that. We're not all going to make excuses for Apple so they continue their bulls**t extortionist tactics

Have I or have I not, since day one, been stating categorically how Apple intends to not meet the spirit of the law in the EU? The specific details of how Apple intended to achieve this may have been off (but then again, I don’t have an entire legal team at my beck and call), but I think I have been fairly spot on in my assertion that Apple intends to keep their App Store commission in one way or another.

The idea that just because many people here don’t like Apple’s App Store policies, that Apple will surely change their policies in the EU to something you will all like, and which Apple will loathe, is frankly quite ludicrous.

The world does not revolve around the whims of random Macrumours members. For better and for worse, this is who Apple is. They are only going to give up App Store revenue kicking and screaming, and the sooner people understand and accept that, the less shock (real or feigned) there will be when decisions like this are made.

Because that’s basically what discussion on this entire forum has been revolving around ever since news of the DMA broke, and it’s frankly frustrating. We would have had so much more productive conversations if people weren’t so absorbed in theory crafting how Apple would be screwed by every single thing that’s happening around them.

 

[Zest28]

Way to twist people's words. No one here is thinking that.

Apple’s position here is ridiculous.

A) The ecosystem is locked down and curated to provide users with the best possible experience. The ‘Walled Garden’ exists to maintain a safe, consistent, well-designed UX for premium products.

B) Apple maintains the ecosystem and spends lots of time and money doing so, so of course they deserve a large cut of all commerce occurring within it.

Pick one.

You can’t have it both ways. A or B. Not both. They’re incompatible.

Either Apple needs to dramatically reduce its fees and turn its ecosystem into a perk of owning these premium devices, OR Apple needs to open up the ecosystem and stop taking a huge cut of everyone else’s commerce (especially commerce outside the App Store).

Apple wants to have its cake and eat it too. That won’t fly, and so they’re being slapped down.

Government intervention doesn’t help anyone here. But Apple’s business practices are garbage here. This is pure greed and rent-seeking, with Apple destroying its long-term brand equity for the sake of short-term profits.

Tim likes to proclaim that he supports Option A, while he simultaneously does everything he can to enact Option B.

Apple’s greed is getting out of control. See iCloud and SSD and RAM pricing for more examples of this. Slowly but surely, 90s Apple is reemerging - a million SKUs and ridiculous penny-pinching everywhere you look. They’re destroying their brand for the sake of short term profit.

Apple is greedy?

What about LVMH then. They have much higher profit margins than Apple. But i suppose it’s fine because they are an EU company.

iOS is the best platform on the market and everybody wants to take advantage of it for free. And people call Apple greedy?

 

[heretiq]

Since there’s a lack of competing mobile phone OS and application stores, access to these should be regulated.

You got what you asked for. EU Regulation is the reason this thread exists. It mandates the access you wanted, but it does not seem that you and others asking for regulation are happy with the regulation-compliant solution that Apple created.

This will always be the case: people and business will reluctantly comply with anything they’re forced to do especially if they believe it is contrary to their interests. A better solution is always a competitive alternative to a product that is lacking as those solutions will be optimized for those it is targeted to.

Here are some alternatives:

1. https://www.digitaltrends.com/mobile/apostrophy-os-android-ios-alternative-hands-on-ces-2024/

2. https://www.pcmag.com/picks/break-away-from-android-ios-7-free-open-source-mobile-oses-to-try

Those seeking a non-proprietary altetnative to the iPhone or Android can choose from what’s available or go create their own. What they can’t do is insist on private companies to be forced by government edict to adopt someone else’s vision for their product. This is a formula for stagnation and making no one happy as we can see in this thread.

 

[SmugMaverick]

I’m assuming fines such as these would go to court and drag in for years.

Which is what Apple wants, except when it’s China calling and they bend over.

 

[Zest28]

You got what you asked for. EU Regulation is the reason this thread exists. It mandates the access you wanted, but it does not seem that you and others asking for regulation are happy with the regulation-compliant solution that Apple created.

This will always be the case: people and business will reluctantly comply with anything they’re forced to do especially if they believe it is contrary to their interests. A better solution is always a competitive alternative to a product that is lacking as those solutions will be optimized for those it is targeted to.

Here are some alternatives:

1. https://www.digitaltrends.com/mobile/apostrophy-os-android-ios-alternative-hands-on-ces-2024/

2. https://www.pcmag.com/picks/break-away-from-android-ios-7-free-open-source-mobile-oses-to-try

Those seeking a non-proprietary altetnative to the iPhone or Android can choose from what’s available or go create their own. What they can’t do is insist on private companies to be forced by government edict to adopt someone else’s vision for their product. This is a formula for stagnation and making no one happy as we can see in this thread.

Thanks to the EUSSR, people are now being spammed by accepting Cookies to every website they go. Governments can’t handle their own business, so they are not a really in a position to design smartphones themselves.

 

[Sarafay]

So you get 5 years of updates for free but have to pay for strange gatekeeper fees.

 

[d686546s]

it does not seem that you and others asking for regulation are happy with the regulation-compliant solution that Apple created.

The Commission hasn't even started assessing these proposals, nor begun to consult on them, so the best advice to anyone is to cool their jets and wait before celebrating Apple's triumph over regulation.

I doubt Apple will be forced to remove all the deliberate point of friction it has introduced, but I also wouldn't be surprised if they will not be able to go ahead with the full programme.

 

[Beautyspin]

Clickbait title...

"Developers can choose to adopt these new business terms, or stay on Apple’s existing terms."

You carry on only selling via App Store - NOTHING CHANGES.

You want to use Apples technology and API and sell via another Store in Europe... you have to pay the core fee.

That is fair enough.

Apple wants to sell stuff in the EU, then follow the EU rules and terms. If Apple wants to sell anywhere except the EU, nothing changes. You want to use the EU infrastructure to sell stuff in the EU, you have to adhere to the rules. Fair enoguh.

 

[Beautyspin]

View attachment 2341355So where do we think we are all standing on the Kübler-Ross grief cycle?

I think a few are still in denial (shock, avoidance, "This is NOT allowed it’s literally EU law, rarrrrr!") whereas the rest are on anger ("Ok I actually read and understand the law and now realise they are allowed to do this but screw Apple this is typical of their greed, I hate them, I want a free for all, rarrrrrr!").

Can we all hurry up and fast forward to acceptance.

I think Apple is in the denial phase. Then when the fines start coming in, it will go to Anger phase. Then as it starts paying the fines and slowly 10 to 20% of its global revenues, it will be depressed. When the threat of breaking up Apple into several pieces emerges, then slowly acceptance will dawn on Apple.

 

[Abazigal]

Which is what Apple wants, except when it’s China calling and they bend over.

Well, for one, China is not calling for Apple to do anything which would result in them losing control over their own platform.

I think Apple is in the denial phase. Then when the fines start coming in, it will go to Anger phase. Then as it starts paying the fines and slowly 10 to 20% of its global revenues, it will be depressed. When the threat of breaking up Apple into several pieces emerges, then slowly acceptance will dawn on Apple.

And then maybe Apple will finally decide to withdraw from the EU.

But in all honesty, I think this quote says this best.

Apple’s Plans for the DMA in the European Union

The delicious irony in Apple’s not knowing if these massive proposals will be deemed DMA-compliant is that their dealings with the European Commission sound exactly like App Store developers’ dealings with Apple. Do all the work to build it first, and only *then* find out if it passes muster...

daringfireball.net

The EC’s obsession with payment processing and commissions blinded them, I think, to the fact that Apple has always had other options for monetization. This Core Technology Fee, based on installations rather than purchases, is one of them.

 

[Beautyspin]

As will everyone here thinking that Apple should just throw away everything that made their ecosystem unique and so successful in the first place.

Yes, if it is against the laws.

 

[Abazigal]

Yes, if it is against the laws.

That remains to be seen (see my link above to John Gruber’s coverage of this). I genuinely believe the EU may have been blindsided here.

 

[d686546s]

That remains to be seen (see my link above to John Gruber’s coverage of this). I genuinely believe the EU may have been blindsided here.

Yes, that may indeed be the case on both counts.

I still believe it may be shortsighted on Apple's part. One thing that has been highlighted by opponents consistently, and where I think they are right, is that i) the App Store is a good product and does not need to shy away from competition and that ii) it is so entrenched in what people expect from their iPhone that I wouldn't expect massive shifts away from it. Android always had the ability to install apps directly and run third party app stores and the Play Store still came out on top.

I think Apple could have complied with the spirit of the law more broadly and still got most of what it wants with minimal impact on their bottom line and without relinquishing much effective control in practice.

Instead, right when its practices across the board are under regulatory and legislative scrutiny not just in the EU but in many other countries, it signals that it will be petulant and an uncooperative partner. If you're a regulator or legislator, the takeaway is that laws and regulations need to be soul-crushingly prescriptive, much more so than the DMA currently is, so that's the direction a lot of jurisdictions will potentially be headed.

You will likely say that this should have been obvious to anyone who has watched Apple over the decades, and I agree. Still, we can't see the future and I may just as well be wrong, but I do think Apple's tactical victories may turn out to be strategic blunders.

 

[Mrkevinfinnerty]

Well, for one, China is not calling for Apple to do anything which would result in them losing control over their own platform.



And then maybe Apple will finally decide to withdraw from the EU.

But in all honesty, I think this quote says this best.

Apple’s Plans for the DMA in the European Union

The delicious irony in Apple’s not knowing if these massive proposals will be deemed DMA-compliant is that their dealings with the European Commission sound exactly like App Store developers’ dealings with Apple. Do all the work to build it first, and only *then* find out if it passes muster...

daringfireball.net

Gruber boot licking Apple. Shock!

 

[Abazigal]

Android always had the ability to install apps directly and run third party app stores and the Play Store still came out on top.

One thing which was revealed during the recently concluded Epic/Google trial is that Google had gone so far as to bribe developers to keep them from launching third party app stores, and even cutting deals with Spotify and Netflix (spotify didn't have to use google payments, while Netflix only needed to pay 10%).

So I am not sure if Google is that valid an example to use, since all signs of users continuing to favour the play store were indirectly influenced by Google behind the scenes. You may well be right that users still prefer the iOS App Store, but for Apple, the potential downside of having majority of developers abandon the App Store, however infinitesimally small, appears to be serious enough that Apple would rather not take the risk at all.

Gruber boot licking Apple. Shock!

Does that make him wrong though? Not everything critical of Apple is necessarily right, just as not everything praising Apple is automatically wrong.

 

[AppliedMicro]

I’m assuming fines such as these would go to court and drag in for years.

Which court though?
And why should that court decide anything else than, maybe, reduce the fine a little bit? The intention of the law is very well spelled out - I don't think they'll be deciding against the commission.

The reality is, Apple devices depend way more on third party apps and digital services than they depend on Apple. The reason why these depend on Apple is because millions and millions of people, their customers and potential customers buy their devices.

If developers would abandon iOS tomorrow, their iPhone business would be toast in short time. If Apple abandoned developers, most would simply move to the other platform and and their business be fine.

Still, it's one company against many - it's an interesting power dynamic.

 

[Mrkevinfinnerty]

Does that make him wrong though? Not everything critical of Apple is necessarily right, just as not everything praising Apple is automatically wrong.

Yeah. His 'this is anti Apple so it's anti American trope' is just stupid.

 

[AppliedMicro]

If Apple starts charging 50 cents for Facebook and Instagram etc., the Appstore will be a graveyard with no apps and let us see who will use iPhones. They will be useful as a paperweight.

I'm not sure. People would still want those apps.

By the way, I'd consider that one of the fairest "per-use" compensation methods (if they'd only charge such an amount for a user's initial download) for Apple's notarisation and app review - that still does not overburden small developers with niche apps (as a fixed fee for everyone would).

Or not. We will see. Apple didn’t just decide to do this. They pay attorneys fees of $1B and I hope they get something in return.

Attorneys are pursuing the interest of their client. There's only so much even the best attorneys can do, according to the instructions of their client. Coming up with a "solution" that is most likely able to withstand regulatory or legal scrutiny doesn't mean that it will.

 

[Abazigal]

The reality is, Apple devices depend way more on third party apps and digital services than they depend on Apple.

Yes and no.

What I believe is that the majority of developers simply have no interest in this fight. They have a good gig going. Make a great app, and sell it for some good cash in the App Store. Apple takes 15 or 30%, and there's still a tidy sum left over to live comfortably. Of course more cash is always good, but they are not complaining.

There are well over 35 million developers releasing apps for the App Store, and it's frankly kinda ridiculous to suggest that each and every one of them feels the same way towards Apple. Netflix, Epic and Spotify do not get to speak for the entire developer community at large. If anything, Epic's recent stunts have probably done more harm than good, because they all but handed Apple their legal victory, and in the process, cemented Apple's unassailable authority over iOS.

 

[d686546s]

One thing which was revealed during the recently concluded Epic/Google trial is that Google had gone so far as to bribe developers to keep them from launching third party app stores, and even cutting deals with Spotify and Netflix (spotify didn't have to use google payments, while Netflix only needed to pay 10%).

So I am not sure if Google is that valid an example to use, since all signs of users continuing to favour the play store were indirectly influenced by Google behind the scenes. You may well be right that users still prefer the iOS App Store, but for Apple, the potential downside of having majority of developers abandon the App Store, however infinitesimally small, appears to be serious enough that Apple would rather not take the risk at all.

While that's absolutely true, it is also worth pointing out that all the alternative App Store that did launch on Android, including Epic's own store, didn't actually get very far. It's an interesting counter factual for sure.

I also still struggle to fully reconcile the verdicts on both of Epic's cases against Apple and Google. Not so much on the basis that Google engaged in different conduct than Apple, that's quite straightforward, but if one has a monopoly position, surely so must the other.

In any case, it's going to be some interesting years.

 

[Nuno Lopes]

If developers would abandon iOS tomorrow, their iPhone business would be toast in short time. If Apple abandoned developers, most would simply move to the other platform and and their business be fine.

Developers will not abandon iOS because their customers are buying and using those devices. Their core challenges is competition amongst them.

Answering the original question, my point was that the incentive for Apple to add new features and adapting the API accordingly is to keep customers needing to buy iOS devices.