Apple Unveils Major Changes to App Store in Response to EU Competition Law

In a significant move, Apple announced substantial changes to its App Store and services for users in Europe to comply with the European Union’s (EU) new competition law effective March 7. These changes mark a departure from Apple’s traditional tight control over its App Store, influenced by a checkerboard of laws globally.

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Key Transformations:

1. Alternative App Stores: Users in the EU can now use alternative app stores to download games, productivity tools, and other apps on iPhones and iPads, breaking Apple’s historical monopoly.
2. Competing Payment Methods: Banks and shopping services within apps can now offer competing payment methods, providing users with more choices.
3. Alternative Browsers: Future iPhone users will have a menu option to download alternative browsers to Safari, such as Chrome and Firefox, diversifying browser options.
4. Digital Markets Act (DMA): These changes are in response to the 2022 Digital Markets Act, a comprehensive law aimed at reducing the power of major tech companies. Other tech giants like Amazon, Meta, Google, and Microsoft have also announced adjustments to align with these regulations.
5. Financial Impact: Apple’s App Store sales in Europe contribute approximately 6% ($24 billion annually) to its global revenue. The changes might affect Apple’s financial dynamics, especially the App Store’s 30% commission on developers’ sales.
6. Developer Options: Developers using the App Store in Europe now have the choice to continue with existing commission terms or opt for a new fee structure, including a reduced commission fee of up to 17% for digital goods and services.
7. New Fees: Developers will be charged a fee of 50 euro cents for every app download after surpassing one million downloads within a 12-month period, applicable to both App Store and alternative downloads.
8. Timely Warning: Apple cautioned that the new policies might expose users to increased privacy and security threats, emphasizing the need for continued oversight.
9. Notarization Process: Apple introduced a new notarization process to maintain control over apps distributed across iPhones, ensuring automated scans for malware and information sharing with users before app downloads.
10. Challenges from Developers: Some developers, including Tim Sweeney, CEO of Epic Games, criticized Apple’s new policies, labeling them a “horror show” with additional fees and restrictions.

These changes reflect the ongoing impact of regulatory frameworks on major tech companies, shaping a diverse landscape for digital experiences based on regional laws and regulations. The EU’s Digital Markets Act is at the forefront of this transformation, encouraging competition and user choice in the tech ecosystem.

Apple's plan to thwart Europe's new Digital Markets Act law is a devious new instance of Malicious Compliance.

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…

— Tim Sweeney (@TimSweeneyEpic) January 25, 2024