During a workshop event in the European Union today, Apple shed new light on how the Core Technology Fee plays into its compliance with the Digital Markets Act. In particular, the company acknowledged concerns that the CTF could ultimately end up bankrupting small developers who have a free app go viral.
Apple’s explanation came in response to a question from Riley Testut, the creator of AltStore. Testut explained that in high school, he created an app – which was distributed outside the App Store – that received 10 million downloads. Under the new App Store Guidelines, Testut would owe Apple €5 million due to the Core Technology Fee.
Apple’s Kyle Andeer explained that Apple hasn’t yet figured out a solution to this problem, but it’s something it continues to work on. Andeer also pointed out that, based on the data, Apple “didn’t see many of examples” of situations like Testut’s.
Here’s a transcript of the full interaction:
Testut:
So my question is if I was in high school today and I released the exact same app outside the App Store and I got the exact same download numbers, would Apple actually charge me and my family 5 million euros knowing it would most likely financially ruin us?
Andeer:
Obviously what we were trying to do is tear apart a model that’s been integrated for 15 years. That covered everything from technology to distribution to payment processing.
And the beauty of that model is it allowed developers to take risk. Apple only got paid if the developer was getting paid. And so that was an incredible engine for innovation over the last 15 years. We’ve seen it go from 500 apps to more than 1.5 million.
To your point, we’ve seen kids everywhere from 8-year-olds, 9-year-olds, 10-year-olds to teenagers develop some amazing applications. And it’s been one of the great success stories of the App Store through to today.
In terms of the core technology fee and our new business model, we had to change. The mandates of the DMA forced us to tear apart what we had built and price each component separately. And so we now have a fee associated with the technology, tools, and services.
We now have a fee associated with distribution and the services we provide through the App Store, and then we have a separate fee for payment processing if a developer wants to use it. To your point, what is the impact on the dreamer, the kid who’s just getting started?
And that could be a kid, it could be an adult, it could be a grandparent. We want to encourage — we want to continue to encourage those sorts of developers.
We build a store based on individual entrepreneurs, not so much catering to large corporate interests. And so we really wanted to figure out how do we solve for that. We haven’t figured out that solution here.
We looked at the data, we didn’t see many examples of where you had that viral app or an app that just took off that would incur a huge cost. That said, I don’t care what the data said.
We want people to continue to feel and not be scared that, hey, I’m going to — some parent — I’ve got four kids who play around with this stuff. I don’t have 5 million euros to pay. This is something we need to figure out.
And it is something we’re working on. So I would say on that one, stay tuned.
Andeer didn’t have anything further to share on how exactly Apple can solve this problem, but his response makes it clear that Apple has heard this feedback from developers. Have any ideas on how Apple could solve this one? Let us know down in the comments.
You can find a video version of the interaction between Testut and Andeer via Steve Troughton-Smith on Mastodon.
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