Apple iPhone users within the European Union (EU) will gain the ability to download apps from third-party app stores, thanks to the new Digital Markets Act.
In response to the European Union’s Digital Markets Act (DMA), scheduled to be implemented in March, Apple has announced its intentions to revamp its app ecosystem. This represents the most substantial overhaul since the establishment of the App Store in 2008. A noteworthy change is the permission for third-party app stores on iOS, challenging the longstanding exclusive distribution role of the Apple App Store. These extensive modifications are expected to be implemented with the launch of iOS 17.4 in March.
In the new framework of “alternative app marketplaces,” users within the EU using iOS 17.4 will be able to download these marketplaces from their respective websites. However, these marketplaces must still adhere to Apple’s approval process to function on iPhones. Users are required to explicitly permit the download of apps through these third-party marketplaces, even if they go against App Store guidelines. Additionally, users have the option to set a non-App Store marketplace as their default choice.
Developers also receive increased flexibility. They can choose to use Apple’s payment services and in-app purchases or incorporate third-party payment systems without facing an additional charge from Apple. For those opting for Apple’s in-app payment system, a 3 percent processing fee applies.
Despite these adjustments, Apple maintains a vigilant control over the app distribution process. All apps must undergo Apple’s “notarization” process, and the distribution of third-party marketplaces is overseen through Apple’s systems. Developers are restricted to distributing a singular version of their app across multiple app stores and must comply with fundamental platform requirements, including malware scans.
Regarding costs, developers in the EU now have the option to pay no commission to Apple, depending on the app distribution method they choose. Apple has updated its fee structures, giving developers the flexibility to opt for new business terms or stick to the existing model through the App Store.
Apps distributed through the App Store using an alternative payment system will now be subject to a 17 percent commission (reduced from 30 percent) on digital goods and services. This rate decreases to 10 percent for apps eligible for Apple’s reduced “small business” rate, with an additional 3 percent fee for those utilizing Apple’s payment processing system.
A new introduction is the Core Technology Fee, charging developers €0.50 per annual app install after exceeding a million annual installs in the EU. Apple anticipates that over 99 percent of developers will either reduce or maintain their fees under these new terms.
Apart from app stores and payment systems, Apple is opening up other aspects of the iOS ecosystem in the EU. Alternative browser engines to WebKit will be permitted, and users will have the choice to select alternative browsers when opening Safari for the first time on iOS 17.4. The App Store will now allow global game streaming services, departing from previous restrictions. Additionally, Apple is set to permit NFC payments in third-party apps in the European Economic Area.
The DMA, enacted in 2022, represents the EU’s robust attempt to curb alleged anticompetitive practices by major tech companies, designating them as “gatekeepers.” Apple, identified as a gatekeeper last September, faces obligations related to app installation, uninstallation of stock apps, and changes to default services under the DMA.