But is anyone shocked that Apple would take such drastic measures to safeguard its platform?
New legislation were enacted by the European Union late last year with the intention of forcing large technology companies to open their platforms to rivals. On account of the fact that the deadline for compliance is in March, everyone was waiting to see how Apple, which is notorious for not getting along with other people, would respond. It is now the company’s responsibility to outline the manner in which it would comply with the law, and the outcome is the kind of malevolent compliance that everyone was anticipating. Similarly, the reaction from the coalition of well-heeled detractors who were all hoping to obtain a bit of Apple’s pie for free has been similarly predictable.
An Act Concerning Digital Markets
In 2023, the European Union (EU) established a new system to prevent large technology companies from exerting all of their influence within the union. The Digital Markets Act and the Digital Services Act create regulations for what are known as “gatekeepers,” which are large platforms that act as intermediaries between users and corporations. This includes companies such as Meta, Alphabet, Apple, Amazon, and ByteDance, the owner of TikTok, all of which have large user populations, substantial financial resources, and a great deal of power. One of the most important provisions of the law stated that platform owners like Apple and Google were required to open their systems and permit competing services like alternative app stores. This was a subject that we discussed in great detail back in the year 2020.
On January 25, Apple released a statement that provided an explanation of the effects that the DMA would have on iOS, Safari, and the App Store overall. In the text, there are numerous allusions to the fact that the law makes iOS less secure and that Apple needs to take measures to reduce the dangers that are associated with this. Although Apple does not disclose the particular amount of revenue generated by any individual segment of the business, the App Store is an essential component of the company’s services sector, which generated a total of $22 billion in revenue during the most recent quarter. As a consequence of this, Apple will gladly allow you to establish a competing iOS app store; however, in order to do so, you will be required to climb Mount Everest, dig a tunnel to the heart of the earth, and provide a million dollars in cash.
That’s not entirely what I meant.
Although you are able to compete, you will not want to.
It is not possible for the developers of a potential competitor app store to simply show up and sell their products without any kind of supervision. Starting from the very beginning, it was very clear that even if Apple were to open up its platforms, no third-party app store would be permitted to circumvent the fundamental regulations that the company has established. You are out of luck if you were hoping to run Honest Doug’s App Store (Not A Scam) and take the entire world for a ride if you have been successful in doing so.
It is still necessary for potential competitors to fulfill Apple’s Notarization criteria and to have stringent rules and moderation mechanisms in place to regulate issues pertaining to quality, piracy, fraud, and payment disputes. (The process of notarization will result in Apple conducting a search for “known malware” in these applications, and the company will have the ability to terminate the application if any malware is found.) In order to provide customers with the same level of control to which they are accustomed in the App Store proper, they will require crucial regulations around the acquisition of data. Not to mention satisfying the requirements of the General Data Protection Regulation (GDPR), the Digital Services Act, and a variety of other acronym-heavy EU rules concerning online privacy and digital services. To put it simply, if you wish to run your own App Store, you will need to implement it to the same degree that Apple does.
Apple has also emphasised the importance of app stores ensuring that they are able to fulfil their commitment to compensate app developers. The provision of a letter from a reputable financial institution that provides evidence that they have access to a minimum of one million euros (about one million dollars) in credit is required in this scenario. Once an application has been downloaded more than one million times, developers will be required to pay a Core Technology Fee. This is taken into consideration to prevent third-party app shops from taking use of Apple’s platform without Apple reaping any benefits. This is a per-install price of €0.50, which is equivalent to around 54 cents, and it is renewed every year for the duration of the app’s installation. Whether or not this brings to mind Unity’s canceled Runtime Fee payment model is something you are free to decide for yourself.
Depending on whether the developer is working for an individual or a firm, Apple charges either $99 or $299 for their services at the present time. After that, Apple will take a fixed commission on every transaction, whether it is to purchase the app itself or to make a purchase within the app itself. Apple takes a 15 percent cut from the revenue of smaller developers who make less than one million dollars annually, while larger brands pay 30 percent of your revenue. There are a few notable outliers, such as “reader” applications that can be downloaded for free but are tied to subscriptions available elsewhere. At this point, it is not entirely apparent under what conditions the sideloading costs could be better (if ever) to the standard “Apple tax” through its exclusive storefront.
What is anticipated to happen
It should come as no surprise that Apple’s remark, along with all of the explanations that were included in its developer notes, went viral. Infuriated were its detractors, many of whom are of the opinion that Apple possesses an excessive amount of control over its platform.
The Chief Executive Officer of Epic Games, Tim Sweeney, who had previously filed a lawsuit against the firm about this topic, was quick to condemn the adjustments. He referred to the new regulations as “a sneaky new instance of malicious compliance.” It is also a “anticompetitive scheme rife with new junk fees on downloads and new Apple taxes on payments they don’t process,” which means that it is forcing app creators to choose between having their apps exclusively available on the App Store or having to choose between the two.
Instantaneously, the Coalition for App Fairness, a lobbying organization that is supported by Epic, Spotify, and Match Group, came to the aid of one of its most significant supporters. According to Rick Vanmeter, Apple’s executive director and a former spokesperson for the Republican Party, the company has “no intention” of complying with the DMA. In addition, the proposal was described as a “shameless insult to the European Commission and the millions of European consumers that they represent,” and it was strongly recommended that the move be rejected by the relevant authorities.
Epic Games has already stated that Fortnite will be brought back to iOS, despite the fact that Sweeney has personally objected to the idea and that his lobbyists have also voiced their opposition to the idea. Fortnite was removed from the Apple Store after Epic intentionally broke Apple’s Terms of Service. The company said that it would launch its very own Epic Games Store for iOS in the year 2024. This store would be used to distribute the company’s own branded games. As part of the announcement tweet, the company stated that it would proceed with its efforts to “argue to the courts and regulators that Apple is breaking the law.”
However, Apple’s competitors who are wealthy are not the only ones who believe the business is showing disrespect to the European Union by implementing these modifications. In an interview with Newtechmania, Andy Yen, the founder of the privacy service Proton, stated that Apple’s compliance with the DMA is “done in bad faith,” and that the iPhone manufacturer is “fighting tooth and nail to maintain its profits and monopoly.” Furthermore, Yen stated that the “strings attached to Apple’s new policies mean that in practice, it will be impossible for developers to benefit from them.” As well as the fact that the actions undermine “the fundamental rights of users by providing Apple with the ability to review applications that have been downloaded from non-App Store sources.” In addition, he stated that the European Commission “cannot allow this blatant violation of the rules to go unpunished.”
The European Commission, however, has not yet budge from its position, despite the fact that there has been a chorus of cries urging that it take action. During an interview with Newtechmania, a spokeswoman for the commission stated, “We take note of Apple’s announcements regarding the compliance deadline.” Regarding these announcements, we do not have any comments. In addition, the spokesman stated that they “strongly encourage designated gatekeepers to test their proposals with third parties.” In addition, it was stated that these remarks were made “without prejudice to the Commission’s own investigation into these proposals.”
By the time this article was written, there had not yet been any comments made by prominent figures from the European Union regarding the topic. Both the President of the European Commission, Ursula von der Leyen, and Margrethe Vestager, who is in charge of topics pertaining to technology and competition, have been active on social media, but they have not discussed this particular topic. In a similar vein, we are awaiting a response from Deezer, who have both previously encouraged the European Union to take action. Not to mention the fact that Spotify had already made its own notice, stating that it will provide app downloads directly from its website, prior to Apple’s announcement.
Spotify has now released a statement, which states that Apple’s ideas are a “total farce.” This information was updated on January 26 at 16:19 Eastern Time. In addition, it is stated that the idea for other app shops is a “undesirable alternative to the status quo” that will penalize successful developers for “their success.”