Apple plans new fees and restrictions for App Store in compliance with EU law: Report

Apple is gearing up to implement changes in response to a recent European law challenging its control over iPhone apps. According to The Wall Street Journal, these adjustments will introduce fees and restrictions for users downloading apps outside of Apple’s closed ecosystem.

EU Legislation Impacting Apple’s Control

The Digital Markets Act (DMA), a new European law addressing alleged anticompetitive practices by technology companies, specifically targets Apple’s dominance in controlling app downloads onto iPhones through the App Store.

In light of the DMA, Apple plans to allow users in Europe to download apps onto their iPhones without using the App Store, a process known as sideloading.

However, the company intends to maintain control by reviewing each app downloaded outside the App Store and imposing fees on developers offering such downloads.

These changes could renew tensions with app developers, who hoped for more freedom from Apple’s restrictions and high commissions. Critics argue that Apple’s system is anticompetitive and unfairly competes with its own apps.

Antitrust Issues and App Store Profits

Apple’s response to the new EU rules is another chapter in the ongoing global battle over its control of third-party software. The company’s App Store operating margin, estimated between 70% and 80%, has faced criticism for being anticompetitive.

A recent court order related to Epic Games’ antitrust case requires Apple to allow developers to direct users to payment systems other than its own. Apple plans to offer developers an alternative payment system with a 27% commission, potentially discouraging widespread adoption.

Industry Preparations

Companies like Meta Platforms, Spotify, and Microsoft are preparing for these changes. Meta is considering allowing app downloads directly from Facebook ads, Spotify plans direct downloads from its website, and Microsoft has considered launching its own third-party app store for games.

This development is part of Apple’s ongoing efforts to comply with EU law by the March deadline. The European Commission continues to engage with Apple and other tech companies to ensure compliance, and noncompliance cases are not ruled out.

With these developments, tech companies see an opportunity to capitalize on any opening Apple provides in Europe. As the industry awaits Apple’s finalized plans, ongoing discussions and regulatory scrutiny will shape the future landscape of app distribution on iPhones.

In a statement to reporters in San Francisco, Margrethe Vestager, Executive Vice President of the European Commission remarked,

I anticipate that all companies will adhere to the March deadline, but Europe also stands absolutely ready to pursue noncompliance cases if necessary.