Apple's Alternative App Store Model In The EU Could Potentially Cost Meta, Others 'Millions' Of Dollars In Yearly Payments To The iPhone-Maker

Apple Inc.'s AAPL proposed "Alternative App Store" model for its users in the European Union could potentially cost Meta Platforms Inc. META and other developers "millions" of dollars in yearly payments.

What Happened: Apple announced that developers who want to use third-party app stores or payment providers in the EU will have to pay a "Core Technology Fee."

According to the terms listed on Apple's developer support website, developers who "achieve exceptional scale on iOS in the EU will pay a Core Technology Fee of €0.50 for each first annual install over one million in the past 12 months."

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While Apple has embraced EU's Digital Markets Act and announced a series of changes to its App Store model, developers who opt for alternative stores or payment providers could have a potentially hefty bill on their hands.

Meta's Threads app was downloaded 2.6 million times in the EU in the first three days of its launch in the region, according to Data.ai.

To put this into context, if Meta offered the app exclusively outside the App Store for iOS users, this would cost the company $72,361 per month in "Core Technology Fee," based on Apple's fee calculator and the three-day download data.

On an annual basis, assuming only three million downloads throughout the year, Meta would have to pay $1.089 million to Apple as "Core Technology Fee."

If Meta distributes the app using the existing terms — that is, exclusively through the App Store — it would cost the company $250 per month.

Given that Meta has multiple apps like Facebook, Messenger, Instagram, WhatsApp and Threads, the bill could be much higher.

Why It Matters: Apple's decision to allow sideloading apps in the EU could result in a fall in its App Store revenue, even though analysts at JP Morgan Chase & Co. believe the impact could be limited, in part due to the fifty-cent fee.

This is down to the fact that the EU contributes only 6% to Apple's App Store revenue.

However, for developers, especially those with large user bases, the fee could be a lot higher.

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Photo: William Hook on Unsplash