Apple overhauls App Store fees in the EU and drops the Core Technology Fee

Apple is revamping its terms for developers in the European Union, rolling out a single commission structure and doing away with the controversial Core Technology Fee, the company announced.

The changes follow talks with the European Commission that Apple says have resolved the two sides’ differences over its business terms and alternative app distribution. Developers can opt into the new terms starting today, with the changes taking effect on October 1.

The biggest shift is the replacement of the Core Technology Fee, which charged developers with high download volumes for each app installation, with a Core Technology Commission. Instead, Apple will collect 5% on digital transactions made through apps distributed outside the App Store. The company is also eliminating the initial acquisition fee and store services fee.

The new App Store commission structure looks like this:

  • 26% for apps using Apple In-App Purchase. For most developers eligible for reduced rates, including Small Business Program participants and subscriptions after their first year, the rate will be 15%.
  • 20% when developers use a third-party payment system within the app, or 10% for those eligible for reduced rates.
  • 15% when an app sends users to a website to complete a purchase, or 10% for developers in reduced-rate programs.
  • 5% Core Technology Commission on digital transactions in apps distributed through alternative marketplaces or directly from the web.

For the first time, developers will be able to offer Apple In-App Purchase alongside alternative payment methods, something that was previously not allowed under Apple’s EU terms. Whichever combination they choose must remain in place for 12 months.

Apple is also introducing new safeguards for younger users. Apps in the Kids category will not be allowed to send users to external websites to make payments. In any app offering third-party payments, users under 18 will be subject to parental controls, while those under 13 will be blocked from following links to external payment pages altogether.

Apple is also broadening the pool of companies allowed to operate alternative app marketplaces or distribute apps directly through the web. To qualify, a developer only needs to meet one of the following criteria:

  • Be a publicly traded or owned by a publicly traded company
  • Have received venture funding  from an established investment firm
  • Have completed a financial audit by a licensed accountant
  • Be a government entity, educational institution, or nonprofit

Apple will continue to require notarization, its baseline review process for apps distributed outside the App Store.

The European Commission welcomed the changes and said it would monitor how Apple puts them into practice, according to 9to5Mac. The overhaul comes after Apple announced eight changes to App Tracking Transparency in Europe following an investigation by Germany’s competition regulator.