By Digital Hub In order to comply with the European Union’s Digital Markets Act, Apple announced on Jan. 25 changes to its payment system for app sellers in the EU, and that it was letting go of the hold its App Store has over iOS app distribution in the EU. As well as the App Store changes, Apple will prompt iOS users in the EU to select a preferred browser instead of defaulting to Safari in accordance with the DMA. These changes will come with iOS 17.4 in the EU in March.
Developers working on iOS apps will be able to distribute them through alternate storefronts (compared to the App Store) in the European Union beginning in March 2024.
Why does Apple have to allow other app stores?
The EU instituted the DMA in order to “ensur[e] fair and open digital markets,” according to the European Commission. The DMA, which aims to prevent tech giants from becoming “gatekeepers,” went into effect in May 2023.
“Innovators and technology start-ups will have new opportunities to compete and innovate in the online platform environment without having to comply with unfair terms and conditions limiting their development,” the commission wrote.
In response, Apple built new options for iOS, Safari on iOS, the App Store and developer app analytics.
New options for iOS in the EU will include:
- APIs and other tools to help developers offer apps on alternative marketplaces.
- A framework and APIs for creating marketplaces.
- Frameworks and APIs for browser engines alternative to WebKit.
- A request form for developers seeking interoperability with iPhone and iOS hardware and software.
- Notarization for iOS apps, a review process with human and automated checks.
- App installation sheets for users, the app developer, screenshots and other information.
- New malware protections to prevent devices from launching malicious iOS apps.
- An authorization process for app marketplace developers.
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Is Apple’s response a benefit or a drawback for app developers?
There is wide-ranging debate over whether Apple’s move is ultimately a benefit or a drawback for large and small application makers, end users, Apple and the technology industry as a whole.
“One of the main positive impacts for developers is the non-discriminatory business environment it (the DMA) is supposed to create,” said Gartner Vice President, Analyst Annette Zimmermann in an email to TechRepublic. “Meaning, apps should not be removed arbitrarily due to subjective app store policies, for example.”
“Apple has less ability to address other risks — including apps that contain scams, fraud, and abuse, or that expose users to illicit, objectionable, or harmful content,” Apple said in a press release. “In addition, apps that use alternative browser engines — other than Apple’s WebKit — may negatively affect the user experience, including impacts to system performance and battery life.”
In response to the DMA, Apple instituted a “Core Technology Fee” for applications not distributed through the App Store, which comes with what some organizations see as prohibitive fees.
What is Apple’s EU Core Technology Fee?
The Core Technology Fee is €0.50 for each first annual install over one million in the past 12 months. Apple predicts less than 1% of app makers will reach the threshold required to pay this fee.
Developers could stay within the existing Apple Store ecosystem, which takes a commission from the revenue of apps sold in the store.
Fees for iOS apps on the App Store in the EU will be 10 percent for most developers or 17 percent for digital goods and services. iOS app developers can use the App Store’s payment processing in the EU for an additional 3 percent fee within the App Store.
Epic Games and Spotify object to Apple’s fees
One company opposed to Apple’s attempt at compliance with the DMA is Epic Games, the developer and publisher of “Fortnite,” which has battled Apple and Google for years over where the money collected from in-app purchases goes.
“Apple’s plan to thwart Europe’s new Digital Markets Act law is a devious new instance of Malicious Compliance,” wrote Epic Games CEO Tim Sweeney. “They are forcing developers to choose between App Store exclusivity and the store terms, which will be illegal under DMA, or accept a new also-illegal anticompetitive scheme rife with new Junk Fees on downloads and new Apple taxes on payments they don’t process.”
Spotify called Apple’s new policies “a complete and total farce,” citing new fees for app developers distributing apps on iOS, “rent” in the App Store and the new Core Technology Fee.
“Apple is forcing developers to stay with the status quo – this alternative that offers no alternative at all completely negates the goal of the DMA,” Spotify’s statement said.
Apple frames its app marketplace as a security measure
Apple frames the DMA as opening up users to potentially harmful material accessed through app stores that are unregulated by Apple. From Apple’s press release: “The new options for processing payments and downloading apps on iOS open new avenues for malware, fraud and scams, illicit and harmful content, and other privacy and security threats.” This is possible – Apple restricts this kind of material in its App Store. Apple has added Notarization for iOS apps to try to curb harmful content.
“There is a lot at stake for Apple because the closed ecosystem that it has been offering has become one of its strongest assets and value propositions,” said Zimmermann. “Security and privacy has been one of Apple’s biggest differentiators, and the DMA is challenging this.”
Browser options and other changes coming to iOS in the EU
Other changes Apple is making to iOS due to the DMA are:
- iOS users will be prompted to choose a default browser instead of automatically being directed to Safari.
- New options for developers using payment service providers within apps.
- New options for processing payments via link-out outside the App Store, such as on a developer’s external website.
- Business planning tools for developers.
Apple expects to release more resources for EU users to help them navigate the changes closer to the March rollout.