To comply with the European Union Digital Markets Law, Apple announced on January 25 changes to its payment system for app sellers in the EU and that it would stop exercising control that its App Store has over the distribution of iOS applications in The EU. . In addition to the App Store changes, Apple will ask iOS users in the EU to select their preferred browser instead of using Safari by default, according to the DMA. These changes will arrive with iOS 17.4 in the EU in March.
Developers working on iOS apps will be able to distribute them through alternative stores (compared to the App Store) in the European Union starting in March 2024.
Why does Apple have to allow other app stores?
The EU established the WFD to “ensure[e] fair and open digital markets”, according to the European Commission. The DMA, which aims to prevent tech giants from becoming “gatekeepers,” came into force in May 2023.
“Innovators and technology startups will have new opportunities to compete and innovate in the online platform environment without having to comply with unfair terms and conditions that limit their development,” the commission wrote.
In response, Apple created new options for iOS, Safari on iOS, the App Store, and app analytics for developers.
New options for iOS in the EU will include:
- APIs and other tools to help developers offer applications in alternative markets.
- A framework and API for creating marketplaces.
- Frameworks and APIs for alternative browser engines to WebKit.
- An application form for developers seeking interoperability with iPhone and iOS hardware and software.
- Notarization for iOS applications, a review process with human and automated controls.
- App installation sheets for users, app developers, screenshots and other information.
- New malware protections to prevent devices from launching malicious iOS apps.
- An authorization process for application market developers.
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Is Apple's response a benefit or a drawback for app developers?
There is widespread debate over whether Apple's move is ultimately a benefit or a drawback for app makers large and small, end users, Apple, and the tech industry as a whole.
“One of the main positive impacts for developers is the non-discriminatory business environment that (the DMA) is supposed to create,” Gartner vice president and analyst Annette Zimmermann said in an email to TechRepublic. “That is, apps should not be arbitrarily removed due to subjective app store policies, for example.”
“Apple is less able to address other risks, including apps that contain scams, fraud and abuse, or that expose users to unlawful, objectionable or harmful content,” Apple said in a press release. “In addition, applications that use alternative browser engines, other than Apple's WebKit, may negatively impact the user experience, including impacts on system performance and battery life.”
In response to the DMA, Apple instituted a “core technology fee” for apps not distributed through the App Store, which comes with what some organizations consider prohibitive fees.
What is Apple's EU Core Technology Fee?
The basic technology fee is €0.50 for every first annual installation over one million in the last 12 months. Apple predicts that less than 1% of app makers will meet the threshold needed to pay this fee.
Developers could remain within the existing Apple Store ecosystem, which takes a commission from revenue from apps sold in the store.
Fees for iOS apps on the EU App Store will be 10 percent for most developers or 17 percent for digital goods and services. iOS app developers can use App Store payment processing in the EU for an additional 3 percent fee within the App Store.
Epic Games and Spotify oppose Apple fees
One company opposing Apple's attempt to comply 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 is a devious new example of malicious enforcement.” wrote Tim Sweeney, CEO of Epic Games. “They are forcing developers to choose between App Store exclusivity and store terms, which will be illegal under the DMA, or accepting a new illegal anti-competitive scheme riddled with new junk fees on downloads and new taxes. “Apple on payments they do not process.”
Spotify called Apple's new policies “a complete and utter travesty,” citing new fees for app developers who distribute apps on iOS, App Store “rental,” and the new Core Technology Fee.
“Apple is forcing developers to stay with the status quo; this alternative that offers no alternative completely negates the purpose of the DMA,” Spotify's statement read.
Apple frames its app marketplace as a security measure
Apple frames the DMA as opening users up to potentially harmful material accessed through app stores that are not regulated by Apple. From Apple's press release: “New options for processing payments and downloading apps on iOS open new avenues for malware, fraud and scams, illicit and harmful content, and other threats to privacy and security.” This is possible: Apple restricts this type of material in its App Store. Apple has added notarization for iOS apps to try to curb harmful content.
“The stakes are high for Apple because the closed ecosystem it has been offering has become one of its strongest assets and value propositions,” Zimmermann said. “Security and privacy have 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 DMA are:
- iOS users will be prompted to choose a default browser instead of being automatically directed to Safari.
- New options for developers who use payment service providers within applications.
- New options for processing payments through links outside the App Store, such as on a developer's external website.
- Business planning tools for developers.
Apple hopes to free up more resources for EU users to help them navigate the changes closer to the March launch.
