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Apple’s new Core Technology Fee is a Core Technology Fleece

At the recent EU-organised workshop, Apple explained its proposals for its compliance with the Digital Markets Act, and took questions from developers. One developer, Riley Testut of AltStore (which has announced it will be a third-party app store in the EU) asked an interesting question about Apple’s new Core Technology Fee. He noted that the free open-source app he made and released while at High School would have put him in 5 million Euros of debt to Apple under their new fee structure, even though it was not distributed through its AppStore.

Apple’s lawyer made soothing noises about Apple wanting to support “the dreamers” and to “stay tuned”, presumably for any exceptions Apple may graciously bestow on such developers.

But it made me wonder: what is the Core Technology Fee actually for, if a developer makes an app and distributes it outside the AppStore? So, I asked:

A developer who wants to make an iOS app must do it on a Mac; these are not cheap, and only available from Apple. You’ll need an iPhone to test it (the xcode simulator won’t allow you to check accessibility with Voiceover). You’ll probably want an iPad, too – bafflingly, apps can work on iPads too, even though iOS and iPadOS are completely different operating systems (according to Apple).

A developer license costs $99 per year (although it’s unclear to me if you actually need one if you’re not uploading your app to the AppStore). And if a consumer wants to download your app, they will need a shiny iThing, which they’ve bought from Apple at a premium price, precisely to reimburse Apple for the core technology it contains. Would anyone buy an iPhone if there were no apps available?

So I don’t buy Apple’s argument that developers must pay them for the core technology that the iPhone user has already paid them for. And I wonder if the EU believe it, either; EU antitrust chief Margrethe Vestager said after the workshop

There are things that we take a keen interest in, for instance, if the new Apple fee structure will de facto not make it in any way attractive to use the benefits of the DMA. That kind of thing is what we will be investigating.

To quote Apple’s legal team: stay tuned.

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3 Responses to “ Apple’s new Core Technology Fee is a Core Technology Fleece ”

Comment by AlDante

The point everyone is missing in the EU vs Apple and DOJ vs Apple conflicts is that Apple is not a monopoly. In the EU, Apple has somewhere around 25% market share on mobile – behind Samsung and way behind Android overall.

A developer who wants to develop for Windows has to buy a PC. That PC will – 70% chance – have an Intel processor. Ask how many Macs there are in government entities. How many applications, ostensibly for the public good, run on Windows clients and how many on Linux or Mac. But no noises about that monopoly, which still persists, despite the lauded victory of the DOJ iover Microsoft in the nineties.

People bought iPhones and still do, because they are beautifully designed. I don’t know of an app that you can only get for iPhone or has no equivalent on Android. People don’t buy iPhones for the apps – there are way more apps available on Android. They buy iPhones for the design and for the promise of security.

I have to pay an exorbitant amount every month to a telephone corporation for data. They didn’t invent the internet, they are merely the gatekeepers on mobile. It costs them no more if I am out of the country, yet they are allowed to charge exorbitant roaming fees. Yet these companies are explicitly excluded from the DMA.

Apple’s Core Technology Fee is more like the pricing structure of the New York Times. Customers have bought the Newspaper, so there is no need for the NYT to charge for advertising? In this case we recognize that the NYT has invested in its brand. Its customers can count on reliable reporting, interesting columns, high profile opinions and sound editing. It was hard work building both the brand and the customer base.

Now someone wants to come along and freeload on the NYT. Demands that they carry their advertising for free, even if it disparages the newspaper it’s in. They don’t have to advertise in the NYT – there are other, much more popular newspapers. Would you say that they should get free advertising?

Comment by Bruce

“The point everyone is missing in the EU vs Apple and DOJ vs Apple conflicts is that Apple is not a monopoly.” – in the EU, no-one suggests Apple is a monopoly. It’s a ‘gatekeeper’ (one of a handful of companies, including Google) and iOS is a “core service” in which the gatekeeper is forbidden from self-preferencing. Levying a fee for developers who distribute outside the AppStore is an attempt to discourage developers from doing so, and is therefore self-preferencing.

“People don’t buy iPhones for the apps” – I don’t say they do. But no-one would buy a premium-priced device that could not run apps. The platform that Apple provides benefits Apple just as much as the developers who build on it.

Comment by saichandu

The introduction of Apple’s Core Technology Fee certainly feels more like a Core Technology Fleece for consumers. While the company claims it’s necessary for innovation, it’s hard to shake off the feeling that it’s just another way to squeeze more money out of customers. Transparency and clarity on where exactly these fees are going would go a long way in easing skepticism.

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