The Core Technology Fee as it exists today in the European Union could bankrupt a developer making free apps -- but Apple said that they are working on a solution to prevent that.
iPhone wouldn't be where it is today with free apps
The EU hopes to combat alleged monopoly practices with the Digital Markets Act. It requires companies like Apple to allow developers to create alternative app marketplaces, use external payment options, and many other changes.
Apple's compliance with the law has been under heavy scrutiny, especially a portion called the Core Technology Fee. The concern is that Apple has prevented anyone without millions in the bank from operating under the EU's new laws.
Simply, if a free app distributed via the new EU App Store rules went viral, it could cost the developer a fortune. After 1 million downloads, the developer would be on the hook for half a euro per download.
Developer and creator of the Alt Store and apps like Delta Emulator Riley Testut asked Apple about the free app problem, providing a personal example. He created an app, presumably the emulator GBA4iOS, in high school, and under Apple's new rules, he'd owe five million euros for his free app.
Testut had a simple question -- would Apple actually ask him and his family to pay five million euros for a high school project that would "likely financially ruin us."
An Apple representative responded, first explaining that the EU's Digital Markets Act forced Apple to "tear apart a model that was integrated for 15 years." The commission developers paid covered technology, distribution, and payment processing, and it was set up so Apple only got paid if the developer did.
It meant any enterprising person, from the 10-year-old programmer to the grandparent trying a new hobby, could develop and publish an app for very little cost. It is part of what took the App Store from 500 apps to 1.5 million.
Apple wants to encourage "dreamers," or entrepreneurs of all ages to continue to pursue indie app ventures. However, the current system that solves for the EU Digital Markets Act doesn't account for those kinds of creators.
"This is something we need to figure out, it is something we're working on," the Apple representative said. "Stay tuned."
"Stay tuned" is well and good -- but doesn't help anybody right now. For now, any developer at risk of crossing the 1 million threshold gets one get out of contract free card that allows them to revert to Apple's original commission system -- which means that they'd have no fees to pay.