The decision is a response to new Brussels laws, but it may also be implemented in the UK soon
Apple will enable EU customers to download apps outside its store in response to new Brussels laws. Additionally, iPhone users will have the option to select their default browser, use alternative payment systems to Apple Pay, and install alternatives to the App Store, potentially including the Google Play store.
However, there is a condition: developers utilizing this option will be charged a flat fee per installation for the first time, altering free-to-play business models and restricting the types of apps that can bypass the store.
Apple announced that it would implement these changes, applicable to any iPhone owner who downloads an update to its iOS operating system in March. This move is aimed at complying with the EU’s Digital Markets Act, which seeks to foster competition for major tech “gatekeepers” like Apple.
Phil Schiller, the Apple executive overseeing its App Store, stated, “The changes we are announcing today align with the requirements of the Digital Markets Act in the European Union, while also helping to safeguard EU users from the inevitable increase in privacy and security risks brought about by this regulation.”
In official statements, Apple expressed its dissatisfaction with being compelled to implement these measures. “The DMA mandates alterations to this system that pose greater risks to users and developers,” the company asserted. “This includes new opportunities for malware, fraud, scams, illicit and harmful content, and other privacy and security threats. These changes also undermine Apple’s ability to identify, prevent, and address issues related to malicious apps on iOS and to assist users affected by problems with apps downloaded outside of the App Store.”
Apple’s modifications may soon be mirrored in the UK, as the digital markets, competition, and consumers bill is anticipated to grant the country’s competition watchdog expanded authority to oversee major tech companies.
Apple clarified that it would not impose a commission on apps developers who bypass the App Store. Instead, it would implement a “core technology fee” of €0.50 for each app installation, which would be applicable to apps downloaded in large numbers. This fee would also be applicable if users download an app via Apple’s own store, provided that developers offer the app to iPhones through an alternative channel.
The fee is assessed yearly, as it applies to both updates and initial installations, although reinstallation and updates within a 12-month period will be exempt. Apps will receive their first 1 million “first annual installs” at no charge, a measure Apple states will keep the fee below 1% for developers.
This approach may be embraced by certain services, such as digital media platforms, which could anticipate quickly recovering the per-user fee through lower commissions on card transactions. However, it could pose economic challenges for other sectors, such as free-to-play gaming, which have a small group of paying users and a larger group of non-paying users. This sector includes Epic Games, a vocal critic of Apple’s policies regarding its App Store, whose flagship game, Fortnite, is free to play.
This isn’t the initial instance of a major platform provider suggesting the implementation of a per-installation charge. In September 2023, the gaming platform Unity introduced a comparable fee, where game apps utilizing its technology were charged $0.20 per install after their initial 200,000 installations. The subsequent negative reaction ultimately led to the departure of the company’s CEO and a substantial revision of the fee structure.
As part of the announcement, and to encourage loyalty to the App Store, developers who agree to the new business terms will experience a reduction in the percentage they pay to Apple from 15-30% to 10-20%, depending on their sales and payment processing methods.
However, Tim Sweeney, the founder of Epic Games, criticized the changes, calling them “hot garbage.” In a post on X (formerly Twitter), Sweeney described them as “a devious new instance of Malicious Compliance. They are forcing developers to choose between App Store exclusivity and the store terms, which will be illegal under DMA, or accept a new also-illegal anti-competitive scheme rife with new Junk Fees on downloads and new Apple taxes on payments they don’t process.”
Rick VanMeter, executive director of the Coalition for App Fairness, a lobbying group representing mid-sized app developers like Epic and Spotify, stated: “This plan does not achieve the DMA’s goal to increase competition and fairness in the digital market – it is not fair, reasonable, nor non-discriminatory … Apple’s ‘plan’ is a shameless insult to the European Commission and the millions of European consumers they represent – it must not stand and should be rejected by the commission.”
