The shift is in response to Brussels laws, possibly extending to the UK soon
Adapting to new Brussels laws, Apple will let EU customers download apps outside its store. The changes include offering iPhone users various default browsers, allowing alternative payment systems, and permitting alternative app installations. However, developers opting for this option will face a flat fee per installation, challenging free-to-play models and restricting certain app types.
Apple announced the implementation of these changes, applicable to any iPhone user who downloads the March update for its iOS operating system. The move is in response to the EU’s Digital Markets Act, which seeks to foster competition among major tech “gatekeepers,” including Apple.
Phil Schiller, the Apple executive overseeing the App Store, stated, “The announced changes align with the requirements of the Digital Markets Act in the European Union, aiming to safeguard EU users from the inevitable heightened privacy and security challenges posed by this regulation.”
In official documentation, Apple expressed its discontent with being compelled to adopt these measures, emphasizing, “The DMA mandates alterations to this system that introduce greater risks for users and developers. This includes increased vulnerabilities to malware, fraud, scams, illicit and harmful content, and other privacy and security threats. These changes also undermine Apple’s capacity to identify, prevent, and respond to malicious apps on iOS and to assist users affected by issues with apps obtained outside of the App Store.”
The alterations introduced by Apple may soon be mirrored in the UK, as the digital markets, competition, and consumers bill is anticipated to grant the country’s competition watchdog increased authority over major tech companies.
Apple clarified that it wouldn’t impose a commission on developers bypassing the App Store, but a “core technology fee” of €0.50 per app installation would be charged, particularly for apps with high download volumes. This fee extends to instances where users install an app through Apple’s store, provided developers offer the app for iPhone through alternative channels.
The fee is applicable annually, triggered by both initial installations and subsequent updates. However, reinstallations and updates occurring within a 12-month period will be exempt. Apps will receive their first 1 million “first annual installs” without charge, effectively limiting the fee to less than 1% for developers.
This model may find favor with certain services, such as digital media platforms, anticipating swift recovery of the per-user fee through reduced commissions on card payments. However, it poses economic challenges for other sectors, particularly free-to-play gaming, characterized by a small group of paying users and a larger non-paying user base. Notably, Epic Games, a vocal critic of Apple’s App Store policies, falls into this category with its free-to-play flagship title, Fortnite.
This marks not the initial instance where a major platform provider has suggested implementing a per-install charge. In September 2023, the gaming platform Unity unveiled a comparable fee structure, imposing a $0.20 fee per install for game apps utilizing its technology after surpassing the first 200,000 installations. The subsequent backlash ultimately resulted in the departure of the company’s CEO and a substantial revision of the fee arrangement.
As part of the announcement, and with the aim of cultivating allegiance to the App Store, developers embracing the new business terms will experience a reduction in the percentage they contribute to Apple—from 15-30% to 10-20%, contingent on their product and payment processing method.
However, Tim Sweeney, the founder of Epic Games, criticized the changes, labeling them as “hot garbage.” In a post on X, Sweeney characterized them as a “devious new instance of Malicious Compliance.” He asserted that developers are being compelled to choose between App Store exclusivity and potentially illegal store terms under DMA or accepting a new anti-competitive scheme, which he deemed also illegal, featuring additional fees on downloads and new charges from Apple for payments they don’t process.
Rick VanMeter, the executive director of the Coalition for App Fairness, a lobby group representing mid-sized app developers like Epic and Spotify, expressed dissatisfaction, stating, “This strategy fails to fulfill the DMA’s objective of enhancing competition and fairness in the digital market. It lacks fairness, reasonableness, and non-discrimination. Apple’s ‘plan’ constitutes a brazen affront to the European Commission and the millions of European consumers they represent. It must be opposed and rejected by the commission.”