In response to the Digital Markets Act (DMA), a new European law requiring major tech companies to open their platforms by March, Apple announced plans to allow competitors access to its iPhone App Store in Europe. This move represents a departure from Apple’s renowned “walled garden” approach, which tightly controls app distribution on its devices.
The DMA mandates changes that could impact Apple’s lucrative App Store fees, particularly if developers such as Spotify and Microsoft leverage the new regulations to circumvent Apple’s 30% fee on in-app purchases. However, Apple also introduced a new fee structure in Europe, including an annual charge per installation for popular apps not utilizing the App Store, potentially maintaining revenue streams.
Apple contends that the DMA exposes users to scams, fraud, and abuse, as apps outside its App Store won’t undergo the same content review and may contain malware. Additionally, Apple warned of potential battery life issues with new browser apps enabled by the DMA.
While developers, who have long contested Apple’s fees and rigorous App Review program, may celebrate these changes, the alterations are limited to Europe and accounts registered in the EU. The adjustments will be implemented through an iOS software update in March.
The key changes include allowing non-Apple companies to offer app stores in Europe, albeit with an application process for Apple’s authorization. These new app stores will be special iOS apps integrated with Apple software to comply with the DMA, enabling Apple to monitor and revoke permissions if needed. Users installing apps from alternative stores will receive detailed information in settings, including download dates and sources.
For developers like Spotify and Microsoft, interested in distributing apps outside the App Store in Europe, the rules align with their plans. However, Apple’s implementation introduces additional complexities. Developers can now bill users directly within the app, offering more flexibility in payment options.
Apple remains firm on collecting fees and commissions from apps using alternative payment methods or app stores, even with the reduced commission rates in Europe. The changes reflect the most significant response to regulatory pressures urging Apple to open its platforms, providing a glimpse of potential developments if similar regulations were implemented in the U.S.
