Apple’s EU Core Technology Fee pulls free apps into the App Store margin machine as DMA probe widens
Daniel Simon ·
Apple’s response to the European Union’s Digital Markets Act is shifting costs onto developers that historically paid nothing. At the center is a Core Technology Fee that charges 0.50 euro for each annual first install over 1 million in the EU if a developer opts into Apple’s new EU terms.
Those terms are spelled out on Apple’s developer site and took effect with iOS 17.4. Developers that accept the EU alternative terms get lower commissions on in app payments but become liable for the per install fee across app stores and web distribution.
What the documents and filings show
In March 2024 the European Commission opened formal proceedings into Apple’s DMA compliance and pointed to the Core Technology Fee as a potential deterrent to alternative distribution in practice. The Commission’s notice cited concerns that Apple’s terms could undermine the objectives of the DMA even if Apple claims formal compliance.
Apple’s published EU schedule sets a 17 percent commission on digital goods, with an additional 3 percent if Apple’s payment processing is used. The Core Technology Fee then applies to annual first installs above 1 million per app, regardless of whether a user downloads from Apple’s store, a rival marketplace, or the web after Apple notarization.
That structure matters for scaling apps that monetize through ads or off platform subscriptions. Under the old App Store rules, a free news app with minimal in app sales paid zero. Under the EU alternative terms, the same app with 5 million annual first installs in the EU would owe roughly 2 million euros in Core Technology Fees if it opted in.
The competitive effect Apple does not highlight
Spotify and Epic Games told the Commission that the Core Technology Fee makes alternative app stores and web distribution commercially unattractive for popular free to download services. Their submissions argue the fee simulates a tax on distribution that preserves the economics of Apple’s store by deterring mass migration.
Apple says the fee reflects costs of developer tools, APIs, and security review. Apple also notes that developers can remain on the legacy terms to avoid the fee, but those developers cannot use alternative distribution privileges or the reduced commission tiers.
Regulators are evaluating whether an optional fee can still breach DMA obligations if the option neutralizes the mandated opening of distribution. The Commission’s March 2024 proceedings also target Apple’s anti steering design and user choice screens for defaults, which developers say remain complex and biased toward Apple services.
The financial stakes run beyond a handful of headline apps. Apple does not break out App Store revenue, but Services remains a growth pillar in Apple’s Form 10 K filings. A broad shift that pulls free to download EU apps into a per install charge could protect Services margins even if commissions on in app sales tick down.
The next step is procedural. The Commission can issue a preliminary finding and impose interim measures. If it finds non compliance, it can fine Apple up to 10 percent of global turnover and order changes to terms, after which Apple can challenge any decision before the General Court.