Developer MacPaw has announced it is halting plans to launch Setapp Mobile, its alternative iOS app marketplace in the European Union. The company attributed the decision to the financial risks associated with Apple’s Core Technology Fee (CTF), a new commission structure introduced to comply with the EU’s Digital Markets Act (DMA).
In an official company blog post, MacPaw stated it was “pausing our plans” for the alternative app store, which was intended to offer a curated suite of subscription-based applications for iOS users in the EU. The project’s discontinuation marks a significant early challenge to the competitive landscape the DMA was designed to foster, highlighting the practical barriers developers face when attempting to compete with Apple’s App Store.
Setapp has long operated a successful subscription service for macOS apps, and the planned mobile marketplace was a major expansion of its model. The company’s decision to withdraw suggests that the current terms for third-party marketplaces create an unsustainable business environment for certain types of app distribution models, particularly those that include free or freemium applications.
The central issue cited by MacPaw is Apple’s Core Technology Fee. Under the new terms for developers in the EU, Apple will charge €0.50 for every “first annual install” an app receives after it crosses a threshold of one million installations in a 12-month period. This fee applies even if the app is free and generates no revenue for the developer. For a subscription service like Setapp, which relies on users trying out multiple apps, this fee structure presents a significant financial risk.
MacPaw explained the dilemma, stating, The main problem with the CTF is that it is levied on all app installations, including free ones. This means that if we offer a free or freemium app, we still have to pay Apple for every user who installs it.
This could result in developers owing Apple substantial fees for users who never convert to paying subscribers, making financial forecasting difficult and potentially unprofitable.
MacPaw concluded that the potential costs imposed by the Core Technology Fee made the Setapp Mobile venture too risky to pursue under the current conditions. The company’s business model depends on attracting a large volume of users to its platform, where they can then subscribe. The CTF would require MacPaw to pay Apple for user acquisition on a massive scale before generating any subscription revenue, creating a prohibitive upfront cost. Other developers, including the team behind the alternative marketplace AltStore, have also publicly criticized the fee as a major obstacle to competition.
It remains unclear whether MacPaw will reconsider launching Setapp Mobile if Apple modifies its DMA compliance terms or if EU regulators intervene to challenge the fee structure. The specific financial modeling that led MacPaw to its decision, including projected user numbers and potential CTF liabilities, has not been publicly released. The long-term viability of other planned marketplaces that rely on freemium or subscription models is also uncertain.
The cancellation of Setapp Mobile serves as a prominent case study for European regulators overseeing the implementation of the Digital Markets Act. The incident may increase scrutiny on whether Apple’s compliance plan, particularly the CTF, genuinely promotes a fair and competitive digital market as intended by the legislation. The focus now shifts to how other developers will navigate these fees and whether regulatory pressure will lead to future changes in Apple’s policies for the EU.
For users in the EU, this development highlights the complexities of the new digital regulations.
- Understand that the rollout of alternative app stores may be slow and face significant hurdles.
- When considering apps from any source, review the developer’s privacy policy and terms of service.
- Follow updates from both platform holders like Apple and regulatory bodies like the European Commission to stay informed about changes to the app ecosystem.
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