Apple scraps the Core Technology Fee, sets a flat 5% cut for EU apps sold outside the App Store

If you sell digital goods on iPhone in the EU, the arithmetic changes on October 1. Apple is dropping the per-install Core Technology Fee and replacing it with a flat 5% commission on digital goods in apps distributed outside the App Store or on the web. Developers can sign the new terms starting today.

Under the new terms, Apple's in-app purchase fee is 26%, down from 30% on its traditional terms. Apple said most developers will still qualify for the discounted 15% rate through the App Store Small Business Program, the Mini Apps Partner Program and the Video Partner Program, and for auto-renewing subscriptions after their first year.

Apps that use alternative payment processing pay 20%, or 10% if they are in one of those programs. App Store apps that link out to complete a purchase on the web pay 15%, or 10% for developers in the programs.

The choice is not month to month. Developers get locked into their chosen payment setup for 12 months, whether that is Apple's in-app purchases, external payments, or a mix of both.

Children's apps are carved out. Apple bars external purchase links from apps in the Kids category, users under 18 need parental approval before buying outside the App Store, and for users under 13 an App Store app cannot link out to a website for a transaction at all, which Apple frames as protection against scams aimed at younger kids.

Getting an alternative app marketplace off the ground also gets easier. Apple used to require a one million euro standby letter of credit from an A-rated financial institution, and it required developers to show they had hit prior financial milestones; those milestones are now optional, with public company status, financial audits and qualifying VC funding accepted as ways to demonstrate financial backing. Notarization stays. Every alternatively distributed app still goes through that baseline review, which covers basic functionality and protection from serious threats.

The reaction split immediately. The European Commission said it welcomed the changes and will monitor how they are implemented, while Epic Games called the new commission structure "junk fees."

Context for why this is happening at all: regulators fined Apple €500 million last year for noncompliance with the Digital Markets Act, and critics called the previous, more complex EU fee structure an example of "malicious compliance." Apple has recently proposed a 15% commission on link-out payments in the U.S. as part of the ongoing Epic Games litigation. Only a handful of regions require Apple to enable third-party app stores, and Europe is the only one where users can install iPhone software from the web. On a July earnings call, Apple CFO Kevan Parekh noted the company had made changes to the App Store business model in certain countries.