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CTF rules are updated to benefit small developers

Apple announced a new basic technology fee (CTF) a few months ago when it confirmed that the iPhone download would reach the European Union (EU). The fee amounts to 0.50 euros per download of the application after the first million annual downloads. It applies to developers who want to sell apps outside of the App Store on competing marketplaces or from their websites.

The CTF received a lot of criticism, especially from some developers who seem to take the iPhone for granted and believe that they should not have to pay Apple any fees for what the iPhone ecosystem does for them. However, the EU has not protested against the CTF, at least not yet.

However, Apple needed to address some issues with the CTF. For example, a new developer who creates an app that goes viral would be at risk of filing for bankruptcy once the CTF threshold is exceeded. Additionally, some apps are completely free and could end up at an immediate deficit.

Apple finally amended the CTF rules this week, giving developers more exemptions.

The CTF is an alternative to the Apple fee that developers currently pay in the App Store, but it only applies to developers in Europe who want to take advantage of iPhone and iPad download support.

Apple posted an update to the CTF rules on its developer website, reiterating that certain categories of developers are already exempt from CTF payments.

“Only developers who achieve significant scale (over one million annual first installs per year in the EU) pay the CTF,” Apple wrote. “Nonprofit organizations, government entities, and educational institutions approved for a fee waiver do not pay the CTF.”

New CTF exemptions

However, Apple also announced two additional conditions under which the CTF is not required, fixing issues with the previous rules.

First of all, Apple will not charge CTF if a developer has no income:

This includes creating a free, non-monetized app that is not tied to revenue of any kind (physical, digital, advertising, or otherwise). This condition is intended to give students, hobbyists and other non-commercial developers the opportunity to create a popular application without paying the CTF.

Secondly, small developers who earn less than €10 million in annual commercial revenue globally and want to sell their apps outside of the App Store will get “a free 3-year path to the CTF.” That should allow them to develop applications, including programs that can go viral, without risking bankruptcy once they have to start paying CTF.

Once the developer exceeds €10 million in revenue, they will begin paying the CTF, but will be capped at €1 million per year:

Within this 3-year period, if a small developer that has not previously surpassed 1 million annual first installs crosses the threshold for the first time, it will not pay the CTF, even if it continues to exceed 1 million annual first installs during that time. If a small developer grows to global revenue of between €10 million and €50 million within the 3-year access period, they will begin paying the CTF after one million first installs annually up to a limit of €1 million per year.

The same rules will apply to iPad apps, as iPad downloading is now mandatory in the EU. Apple has confirmed in the same document that iPadOS will support downloading in the EU, just like the iPhone.

Apple’s concessions show that the company is not going after the little guy, as some might claim. That anyone with a potentially brilliant idea can succeed with an iPhone and an iPad. The original CTF rules contained oversights for scenarios that apply to specific types of developers.

Apple would be a fool to block that creativity with the CTF. But the new rate is certainly necessary. I don’t see how anyone can expect to develop premium apps for iPhone and iPad and not pay Apple some kind of tax.