App Store Revolution: Key Changes and Implications for Europe

Business01/25/2024Mr. SmithMr. Smith
apple-europa
Apple Europe

Key Points

  • Apple opens up its iPhone App Store in Europe due to new regulations.
  • Developers can now create alternative app stores, challenging Apple's traditional control.
  • New fee structure introduced, potentially impacting developers' costs and Apple's revenue.

In a groundbreaking move, Apple has announced plans to open its iPhone App Store in Europe to competitors, breaking down the walls of its renowned "walled garden" that controls app distribution on its devices. The decision, not made voluntarily, is a response to the new European law, the Digital Markets Act, requiring major tech companies to open their platforms by March of this year.

The regulatory changes raise concerns for Apple's lucrative App Store fees, particularly if developers, such as Spotify and Microsoft, capitalize on the opportunity to bypass the 30% fee on in-app purchases and establish their own competing app stores for iPhones.

However, Apple has introduced a new fee structure in Europe, including an annual charge per installation for popular apps not using the App Store. This introduces the possibility that prominent developers may end up paying similar amounts to Apple, even with the new regulations in place.

The tech giant expressed concerns about user safety, suggesting that apps outside the App Store could pose risks of scams, fraud, and abuse, as they wouldn't undergo Apple's rigorous App Store content review and might contain malware. It also warned that some new browser apps using an "engine" not made by Apple, enabled by the DMA, could hurt user battery life.

Developers, in general, may welcome these changes, Apple's decision to open up its platforms is a significant shift. The alterations are a response to the new European law but are limited to Europe and accounts registered in the E.U. They are expected to go live with an iOS software update in March.

What Has Changed?

Apple will now allow non-Apple companies to offer app stores in Europe, but an "authorization" application to Apple is required. These new app stores will be "special" iOS apps integrating with Apple software built to comply with the Digital Markets Act.

Users will see apps installed from alternative app stores in settings, with details about the download source. When developers upload an app for Europe, they will be able to pick which app store they want to distribute it from. Apple will "notarize" the apps, scanning them for malware and other code issues.

Apple will also permit app developers to bill users directly. Previously, apps could only charge users for digital goods — game coins, for example — through Apple's billing system, which takes between 15% and 30% of total sales.

New Business Terms by Apple

  • iOS apps on the App Store under the new terms will pay Apple between 10% and 17% of total digital sales, depending on subscriptions or sales volume.
  • Apps distributed through alternative app stores won't undergo full content reviews like App Store apps but won't pay any commission to Apple.
  • iOS apps in Europe can still opt to use Apple's in-app purchasing software for a 3% fee.
  • Apple will charge an annual fee of half a euro for each first-time app installation over 1 million users.
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