Apple’s new fee for distributing apps in third-party stores
Apple has its mobile app store which, together with Google Play, are the two major global platforms for downloading apps.
In recent months and given new EU regulations, Apple has announced new measures that will affect the payment processing and the way apps are distributed.
The new EU trade rules that constrain Apple’s actions will have to be complied with from March 2024. Apple has therefore been quick to announce the various updates, including the opening of its operating system to third-party app stores.
This will make it easier for developers to distribute an iOS app in third-party stores and not just through the App Store. Despite these new changes, Apple wants to offer developers the option of being with the current terms.
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Apple’s new updates
Apple is finally opening iOS apps to third-party stores in the European Union, ushering in a new era with its advantages and disadvantages.
The new feature is that any application that exceeds one million installations per year must pay Apple a fee of 50 cents for each installation. This introduces a new fee structure for apps that want to be distributed in third-party shops.
While this may be an advantage for some companies, apps that are very popular and have more than 1 million downloads per year will have to pay a large amount of money. In addition, app updates also count as installations and must be paid for.
This is a key point for many companies as app updates are constant nowadays and almost no app goes more than a year without an update. This means that a mobile app will indefinitely pay Apple 0.5 euros per user/year when it exceeds one million installations. In addition, people who installed an app years ago and do not use it often but still receive automatic updates must also be included.
This makes it an expensive proposition for many companies. However, developers will always have the option of keeping the 30 percent reduction and no installation fee, or they can waive the reduced revenue in exchange for paying the 0.5 euro fee.
This development by Apple might be worthwhile for large companies with sufficient financial resources. There are cases of small companies with viral apps that have millions of downloads in a short period and then fall into oblivion on users’ devices. In this case, applying this fee could be a big problem for these companies, which see how their applications are still installed on devices but are not used and are therefore no longer profitable.
Why this new fee?
Apple justifies this new fee of 0.5 euros due to the effort and time the company dedicates to creating tools for developers to help them in their process of creating and distributing applications.
Along with all these new features, Apple will introduce a series of measures to ensure that developers comply with the requirements so that opening up to third-party shops does not create security breaches.
On top of all this, Apple does not make it easy for apps to flow users from one shop to another. For the whole process to work properly, a user must first install the new app shop, then uninstall the old version of the app downloaded from the App Store, and finally reinstall the app via the new shop.
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Differences between the current terms and Apple’s new offerings
From March 2024, Apple will start implementing the new features announced in recent weeks. Due to new EU regulations, Apple is adopting changes to payment processing and the way an iOS app is distributed in third-party stores.
Learn about the differences between the current terms and Apple’s new offerings.
Current terms: Continue to maintain distribution of apps in the Apple Store. When developers distribute an app on the App Store they pay a commission for the sale of digital goods and services.
New terms: Developers have additional distribution and payment processing options. Apple will apply a reduced commission, an optional payment processing fee, and a fee for the first annual installs over one million in the last 12 months. Developers who take advantage of these terms will be able to:
- Distribute iOS apps on the App Store or alternative app marketplaces.
- Process payments through the App Store’s secure in-app purchase system, an alternative payment service provider, or a link to your website from your app.
As can be seen, these updates are generating controversy among Apple, developers, and companies. They see in these fees and new features a possible “trap” that will ultimately substantially increase the costs of distributing a mobile application.
In ABAMobile, we have been working for more than 11 years in the development of software solutions focused on mobile devices. If you have an idea in mind, contact our team and we will advise you without obligation.
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