Apple Faces Strong Action if App Store Changes Don't Align with EU Regulations
In a significant development surrounding Apple’s response to the European Union’s Digital Markets Act (DMA), EU industry chief Thierry Breton has issued a stern warning, stating that Apple will face robust action if its changes to the App Store do not align with the upcoming EU regulations. The DMA, enacted in 2022, addresses alleged anticompetitive practices by major tech companies, designating them as “gatekeepers” and imposing specific obligations.
Apple's Compliance with DMA
Apple’s move to comply with the DMA includes allowing software developers to distribute apps through alternative stores starting in early March. Notably, developers can opt out of using Apple’s in-app payment system, which currently charges up to 30% commissions. However, critics argue that Apple’s fee structure remains unfair and may violate the DMA, with some contending that the changes offered by Apple do not go far enough.
Strong Action if Insufficient Solutions
Thierry Breton emphasizes that the DMA’s goal is to open the internet gates to competition for fair and open digital markets. The assessment of companies’ proposals will commence on March 7, and strong action will be taken if the proposed solutions are deemed insufficient.
Developers' Options and Concerns
Under the new regime, developers still need to submit apps to Apple for review regarding cybersecurity risks and fraud. However, developers now have the option to choose alternative app stores and payment systems. Apple has introduced a “core technology fee” of 50 euro cents per user account per year for developers opting into the new business terms.
Apple estimates that under the new terms, 99 percent of developers would reduce or maintain the fees owed to Apple. However, larger companies with millions of free users, such as Meta and Spotify, maybe more significantly affected. Spotify CEO Daniel Ek criticized Apple’s proposed changes, describing them as ‘vague and misleading’ and accusing Apple of ‘extortion.’
Ek points out that the 0.50 cent Euro fee per download, every year, in perpetuity, is tantamount to ‘extortion.’ He questions the need for an annual flat fee in addition to the existing commission on digital goods, raising concerns about the impact on developers, especially potential start-ups and those offering free apps.
European Commission's Response
The European Commission took note of Apple’s announcements ahead of the compliance deadline and encouraged designated gatekeepers to test their proposals with third parties. In response to the DMA, Apple announced changes to iOS, Safari, and the App Store in the European Union, allowing third-party app stores on iOS for the first time.
Future Implications
While Apple aims to comply with the DMA, criticism persists for the perceived inadequacy and potential negative impact on developers. As the compliance deadline gets closer, the tech industry is waiting to see what happens next and how the European Commission responds to Apple’s plans.
