Apple likes nothing more than to make all the decisions about its products. For example, if you want an app on iPhone, you have no choice but to get it from the Apple App Store. But those were the good old days for Apple. In the European Union (EU), the recently adopted Digital Markets Act (DMA) now forces Apple to change its way of doing things from March 2024, with the release of iOS 17.4.
But that doesn’t mean Apple is giving up its power easily.
The DMA is designed to break up what the EU sees as a technological monopoly of several American tech giants – Apple, Google, Facebook, Microsoft and Amazon (yes, those are GAFAM° – as well as the Chinese company ByteDance, parent company of TikTok.
Thinking about using Chrome and Firefox on iOS? Ah ah ah, naive as you are!
For Apple, this means that iPhone users must be allowed to use other web browsers, other payment systems than Apple Pay, and non-Apple App Stores to download mobile apps.
In return, Apple is doing its best to discourage developers and users from using any of these new freedoms. Here’s what Apple says about this initiative:
The DMA requires changes to this system that pose risks to users and developers. These include new channels for malware, frauds and scams, illegal and harmful content, and other privacy and security threats. These changes also compromise Apple’s ability to detect, prevent, and take action against malicious apps on iOS and to help users affected by issues with apps downloaded outside of the App Store.
In detail, only developers approved by Apple will be allowed to develop alternative web browsers to Safari, and these iOS web browsers will only be available for iOS in the EU.
This sentence seems very suspicious to you because you may be under the impression that there are already alternative web browsers for the iPhone, such as Chrome and Firefox. But these are simply skins for Apple’s Safari web browser. This is why Safari seems to be the most popular mobile web browser.
Web browser makers are well aware that Apple is only doing the bare minimum to comply with the law.
Damiano DeMonte, a spokesperson for Mozilla, Firefox’s parent company, told The Verge that the company is unhappy with Apple because its restrictions will force “Firefox to create and maintain two separate implementations of the browser – a burden that ‘Apple itself won’t have to bear it.’
A “junk royalty”
For those who don’t want to use Apple Pay, Apple will still get a share of the revenue — iOS apps using another payment method must pay a 3% fee.
As for alternative app stores, they are surrounded by a moat of restrictions. Vendors attempting to sell their applications through the alternatives must present a €1 million letter of credit from a leading financial institution before being “allowed” to offer their programs.
Apple defends this measure by saying that it ensures that publishers can support their applications from a cybersecurity point of view. And that this helps prevent malware and scam applications from arriving on the platform. But it will also prevent startups and publishers with little funding from using this development path.
External developers are also required to pay a base technology fee of €0.50 for each first annual install of their marketplace app. While developers in the Apple App Store get one million free installs before having to pay this fee, anyone selling through an alternative marketplace will have to pay this fee immediately.
This “junk fee,” as Damien Geradin, a law professor at Tilburg University, called it, “will disproportionately affect app developers who have limited income, but whose apps are widely downloaded.”
A very well-crafted trap by Apple to trap Spotify
Spotify CEO Daniel Ek, a longtime critic of the App Store, said that under new EU rules for Apple’s App Store, app usage fees could be astronomical.
“Imagine the situation,” he said. “A very popular free application, which has tens or hundreds of millions of users in the European Union, is now subject to a tax on each download and each annual update. Imagine the impact on popular apps like WhatsApp, Duolingo, X and Pinterest.”
Regarding Spotify, Ek explains:
“Spotify itself faces an untenable situation. With our Apple install base in the EU at around 100 million, this new tax on downloads and updates could send our acquisition costs through the roof of customers, potentially multiplying them tenfold: Therefore, Spotify will have to stick to the ‘status quo’ – the very thing we’ve been fighting against for five years.”
Only EU companies can sell their apps through third-party stores
At the same time, Apple says core technology fees will be waived for nonprofits, government agencies and educational institutions. On the other hand, it will not be for free, open source or freemium applications. In practice, this means that there will be no free iOS apps.
Putting this all together, we see that even if Apple can’t take its usual 30% share of app sales from alternative stores, it will continue to make money from these applications.
Additionally, Apple’s restrictions require that independent apps can only be purchased through an alternative store. You cannot sell them from your website. Additionally, only companies in the European Union can sell their apps through third-party stores.
In the EU, Apple will lower its App Store commissions to 17%
By the way, if you are not in the European Union, do not think for a moment that you will be able to buy one of these alternative applications. This is not the case. Even if you use a Virtual Private Network (VPN), Apple will now check your Apple ID billing address, your current location, and your device’s current region.
At the same time, Apple is trying to coax mobile application sellers from the European Union to encourage them to stay in the Apple Store. In the EU, Apple will lower its App Store commissions to 17% for most digital goods and services and 10% for second-year subscriptions and qualified small business developers.
It goes without saying that many software vendors are unhappy with Apple. Epic Games CEO Tim Sweeney, who has long fought against Apple’s stranglehold on the iOS market, called Apple’s European proposal an example of “malicious compliance” filled with “unnecessary costs”.
Thierry Breton is following the file…
So, has Apple done enough? The European Commission, which oversees the DMA, will decide whether Apple has met the law’s requirements. As Thierry Breton told Reuters, “if the solutions proposed are not sufficient, we will not hesitate to take forceful measures.”
Regardless of how events turn out in the European Union, these changes are unlikely to be implemented in the United States. Apple won its antitrust lawsuit against Fortnite maker Epic Games in January 2024. In the absence of action from the US Congress, Apple will continue to do what it sees fit across the Atlantic.
Source: “ZDNet.com”