Apple to Open Door to Third-Party App Stores in Europe to Comply with EU Law
Apple Inc. announced changes to its iOS, Safari, and App Store in the European Union (EU) to comply with the EU’s Digital Markets Act. The most significant change is the allowance of third-party app stores in Europe, a move that Apple was compelled to make. The Digital Markets Act, passed by the European Parliament and Council in 2022, aims to end unfair practices by companies acting as gatekeepers in the online platform economy. As a result, Apple and other tech giants have been classified as “gatekeeper” companies and are legally mandated to make these changes. These modifications will have a significant impact on how apps are distributed and payments are processed on iOS platforms within the EU.
New Safeguards to Reduce Risks
To comply with the EU’s Digital Markets Act, Apple has introduced new safeguards to reduce risks for EU users. While the headline change is the allowance of third-party app stores, Apple is imposing strict requirements for developers interested in creating a third-party marketplace. Developers must provide a €1 million “letter of credit” from an A-rated financial institution and pay a €0.50 “Core Technology Fee” for each first annual installation of their marketplace app. These measures are intended to mitigate risks associated with third-party app stores.
Changes in Browser Choice and Payment Options
Apple is also making changes to browser choice and payment options. In iOS 17.4, Safari users in the EU will be presented with a new choice screen that allows them to select their default browser from a list of options. This change is another step taken by Apple to comply with the Digital Markets Act. Additionally, Apple’s App Store in the EU is getting an overhaul, allowing developers to use their own payment service providers within their apps. This move is significant as it gives developers the ability to offer alternative payment options to users and reduces Apple’s dominance as the exclusive payment processor.
Implications for the Industry and Possible Backlash
The decision to allow third-party app stores and payment options in Europe raises questions about why Apple cannot make similar changes in other jurisdictions. It demonstrates that Apple has the capability to provide these options, which may fuel further discussions about its practices in other regions. This move also comes ahead of an expected antitrust case against Apple from the U.S. Department of Justice later this year, which will examine whether the company has used unfair tactics to protect its market share and restrict competition in various areas.
As Apple takes these steps to comply with EU law, it highlights the changing landscape of app distribution and payments within the European Union. These changes will not only impact Apple but also have implications for other tech giants classified as “gatekeepers.” The implementation of the Digital Markets Act marks a significant development in regulating the platform economy and promoting fair competition.
(Image source: Apple)
Analyst comment
Overall, this news can be evaluated as positive. Apple’s decision to open the door to third-party app stores in Europe is a significant change that will reshape app distribution and payments within the EU. This move is a result of compliance with the EU’s Digital Markets Act and aims to end unfair practices by gatekeeper companies. The introduction of new safeguards and changes in browser choice and payment options further mitigate risks and promote fair competition. However, this decision may raise questions about Apple’s practices in other jurisdictions and could have implications for other tech giants.
