Apple Unveils Changes to iOS in Response to EU’s Digital Markets Act
Apple has released the beta version of iOS 17.4, ahead of its compliance deadline with the European Union’s Digital Markets Act (DMA). The DMA designates Apple as one of the so-called “gatekeepers,” subjecting the tech giant to a series of obligations and restrictions. The changes for iOS developers in the European Economic Area (EEA) include new options for distributing apps from alternative app marketplaces, new frameworks for creating alternative app marketplaces, and new frameworks for alternative browser engines. However, Apple has warned that some of the changes may pose security and privacy risks for users.
Apple Proposes Changes to Contactless Payments to Satisfy EU Antitrust Proceedings
As part of its efforts to settle an antitrust proceeding against Apple Pay, the tech company has offered proposed changes to contactless payments on iOS that it claims are “DMA-compliant.” The proposed changes include new APIs allowing developers to utilise Near Field Communication (NFC) technology in their banking and wallet apps throughout the European Economic Area (EEA). Additionally, Apple plans to introduce new controls that enable users to select a third-party contactless payment app or an alternative app marketplace as their default option. However, it remains to be seen if these proposed changes will meet the requirements set out by the DMA, and Apple could face fines of up to 10% of its annual global turnover if regulators decide they are not compliant.
Apple Introduces New Business Terms and Core Technology Fee for Developers
Coinciding with the DMA-focused changes, Apple has unveiled new business terms for developers in Europe. The changes include the introduction of a “Core Technology Fee” designed to ensure that Apple receives compensation even when developers choose to distribute their apps via alternative app stores or encourage users to pay for additional content through their own websites. Under the new business terms, Apple will also reduce the commission it takes from digital purchases on iOS apps on its App Store. Developers can choose to use alternative payment service providers or link users to their websites for processing payments outside of the App Store, without incurring additional fees from Apple.
Apple Faces Scrutiny over Compliance with DMA Regulations
Apple’s carefully devised business terms and fee structures will need to be deemed “fair, reasonable, and non-discriminatory” by regulators to comply with the DMA. While the DMA allows designated gatekeepers to open their app stores to sideloading, it does not specify business models. It remains to be seen if Apple’s restructuring and choices presented to developers will pass regulatory scrutiny. Apple is also introducing new features to its platform, such as notarization for iOS apps and app installation sheets, which it may argue justify the new fee. However, the company has stressed that compliance with the DMA will introduce new risks for iOS users.
Apple to Expand Choice for iOS Users and Improve App Store Transparency
In response to the DMA’s demands and to encourage users to stay within its ecosystem, Apple is introducing a choice screen that will allow iOS users to select their default browser. Apple will also introduce new labelling on App Store product pages to inform users when an app uses alternative payment processing. Additionally, new in-app disclosure sheets will notify users when they are no longer transacting with Apple, while new App Review processes will verify developers’ communication of transactions using alternative payment processors. Apple will also expand data portability for EU users on its Data & Privacy site, allowing users to export data about App Store usage to an authorised third party.
Apple’s Changes Facilitate Streaming Games App Store
One of the changes announced by Apple allows developers to provide the equivalent of a streaming games app store. This change offers new opportunities for developers while complying with the requirements set by the DMA.
Analyst comment
Positive:
– Apple Unveils Changes to iOS in Response to EU’s Digital Markets Act: This is positive news as Apple is making changes to comply with the DMA, providing new options and frameworks for developers in the European Economic Area (EEA).
Neutral:
– Apple Proposes Changes to Contactless Payments to Satisfy EU Antitrust Proceedings: It remains to be seen if these proposed changes will meet DMA requirements, and Apple may face fines if they are not compliant.
– Apple Introduces New Business Terms and Core Technology Fee for Developers: The introduction of new business terms and reduced commission rates for developers is a neutral change that has both positive and negative implications.
– Apple Faces Scrutiny over Compliance with DMA Regulations: It is uncertain if Apple’s restructuring and choices will pass regulatory scrutiny, so the impact on the market is uncertain.
– Apple to Expand Choice for iOS Users and Improve App Store Transparency: This change aims to improve user experience and transparency, but its impact on the market is uncertain.
– Apple’s Changes Facilitate Streaming Games App Store: This change offers new opportunities for developers and complies with DMA requirements, but the market impact is uncertain.
Analyst Perspective:
Overall, Apple’s changes in response to the EU’s DMA are a step towards compliance and providing more options for developers and users. However, the market impact will depend on the response of regulators and whether these changes effectively address the requirements of the DMA.