It was really hard to believe the developers spent 50 euro cents to escape Apple’s restrictions. But that new Apple tax fee could add up quickly and make the opportunity for third-party app stores hard to bear this new upcoming trend.
Apple is introducing an updated fee structure for the apps that want to operate on these third-party stores. But if a developer still wants to be distributed via Apple’s App Store, too, then the traditional 30% fee is down to 17%. It’s an even less 10 percent fee for qualifying “small business” apps, down from the original 15 %.
Once the apps are popular and see more than 1 million installs per year must pay Apple a fee of 50 euro cent (about 54 cents USD) for every new app installation over that first 1 million and that is the fee charged once per every user each year. Crucially, app updates count as installations, too. Since no app goes more than a year without an update, that means any specific popular app is going to be indefinitely paying Apple 50 euro cents per user per year, above that initial 1 million installs. It’s not just about the apps, the third-party app stores also going to pay Apple 50 euro cents per user per year.
Here’s some analysis of the market: Facebook has more than 408 million monthly users in Europe across all platforms such as the web, Android, iOS, etc. iPhones are the most popular about one-third of the mobile phone market in Europe. If one-third of users have the iPhone Facebook app installed, then Meta would be paying Apple €67.5 million (around $73.4 million) per year, just for the Facebook app. Not only this then there’d be another fee for WhatsApp, Instagram, Messenger, and so on. That number is also just for every active user. Meta would also have to pay for the customers who installed the app years ago and never open it up but automatically get updates.
For big companies, the price is worth enough. The fee is also a big problem on smaller apps. An app that’s gone viral and easily gets 1 million installs but many apps don’t charge users upfront, they could quickly get a disaster of paying a lot of cash. That could be a terrible situation for businesses and social apps like Clubhouse or BeReal. They would have paid millions or billions for their skyrocketing popularity and then continue to pay millions for the new fees they installed on people’s phones.
Many issues going to arise in all of this: a company has to start with a third-party app store, and then the developers have to migrate all of their users over to that third-party app store. And here is the real role of Apple that does not make it easy for apps to shift users from one store to another. A user must have to install the new app store, then uninstall the old version of the app that was downloaded through Apple’s App Store, and at last, reinstall the app through the new app store.
The big industry geek already started complaining about the 50 euro cent fee. Epic CEO Tim Sweeney indicated it as “junk fees.” Spotify CEO Daniel said it was a new scheme to bother people in a post on X (formerly Twitter). “Imagine you have an active base of a hundred million users,” he said.
Hey and Basecamp exec David Heinemeier Hansson said the fee as “clearly one of the poison pills” in Apple’s plan.
According to Apple’s justification, the 50 euro cent fee is for the company that spends a lot of time and effort creating developer tools, and the big apps are the ones that use the tools most of the time.
Now the European Commission will review Apple’s new rules and if regulators feel that something in Apple’s plan violates the laws, they could revert the decision. This new fee already seems a bigger issue for the market.