In response to feedback from thousands of developers, Apple has announced changes to its fee structure for iOS developers in the European Union (EU) as it continues to navigate the bloc's Digital Markets Act (DMA). The tech giant's alterations include exempting developers of free apps from the fee and providing a longer transition period for developers earning below a certain revenue threshold.

Starting today, developers of free apps will be able to entirely avoid the fee, while developers earning under a specific revenue threshold will have more time before they are required to pay Apple. The fee in question, called the core technology fee (CTF), is an opt-in mechanism for iOS developers in the EU. However, developers seeking to take advantage of new entitlements mandated by the DMA, such as sideloading of apps, third-party app stores, and support for alternative payment technology, must agree to the set of business terms that include the CTF.

Despite the fee being closely scrutinized by the EU, which is investigating whether it enables Apple to circumvent its obligations to foster competition in the App Store, the EU has not yet prohibited Apple from charging it. Apple's decision to modify the CTF is aimed at addressing concerns expressed by developers that the fee could disproportionately impact those offering free non-commercial apps or small developers who unexpectedly experience massive success.

Under the revised fee structure, an app that surpasses one million annual installs before the fee threshold is reached can potentially owe a significant amount to Apple, as the fee amounts to €0.50 per first annual install per year. To address this, Apple has introduced two main changes. First, it has introduced a no-fee exemption for developers of non-commercial apps, such as students, hobbyists, and small-scale developers. To qualify for this exemption, developers must certify their non-commercial status annually.

Second, Apple aims to give small developers more time to establish their businesses. Developers with a global annual revenue of less than €10 million will have a three-year "free on-ramp to the CTF," during which they will not be required to pay the fee even if they exceed one million annual installs. If these developers grow their revenue to fall between €10 million and €50 million within the three-year period, they will begin paying the CTF after reaching one million annual installs, up to a maximum of €1 million per year.

In addition to these changes, the EU recently announced that Apple's tablet OS platform, iPadOS, will also be subject to the DMA, granting Apple six months to ensure compliance with the same rules as iOS, the App Store, and Safari browser. Apple has confirmed that the DMA-related changes applied to iOS will equally apply to iPadOS later this fall.

Developers in the EU will have the choice to adopt the Alternative Business Terms for Apps, incorporating these new capabilities and options, or to continue with Apple's existing terms. Once these changes are made available to EU users, the CTF will also be applicable to iPadOS apps downloaded through the App Store, Web Distribution, and alternative marketplaces. Additionally, installing the same app on both iOS and iPadOS within a 12-month period will count as only one first annual install for that app.

Apple's adjustments to the fee structure reflect its ongoing efforts to adapt to the DMA and address concerns raised by developers. These changes strive to strike a balance between fostering competition and innovation within the App Store ecosystem, while also providing opportunities for developers to thrive in the EU market.