Apple sends a message with its App Store changes
The company released its plan to comply with the DMA but it's clear it isn't happy about it.
On the one hand, if you’re a small developer, you might cheer the changes Apple has made in order to comply with the European Union’s Digital Markets Act (DMA). The iPhone maker has lowered the in-app purchase commission to 17 percent (or 10 percent for small businesses and subscriptions after the first year). Not only that, but you’ll be able to offer apps through alternative app stores and avoid paying Apple any commission.
It all seems like a great deal. Until, of course, you remember that Apple spent much of the last two years warning people that the DMA was going to be very bad for the security and privacy of users. It wasn’t going to go quietly when it came time to comply.
Alternative App Distribution: Developers will have the option to distribute their iOS apps through alternative app marketplaces.
Alternative Payment Processors: Developers can choose to use alternative payment processors in their EU apps on the App Store.
Reduced Commission Rates: Apple is reducing the commission rates for iOS apps on the App Store to either 17 percent on transactions for digital goods and services, or 10 percent for the vast majority of developers and subscriptions following their first year.
Payment Processing Fee: An additional 3 percent payment processing fee will be charged for iOS apps on the App Store that choose to use Apple's payment processing. Developers have the option to use a third-party payment processor with no additional fee to Apple.
Core Technology Fee: A new "Core Technology Fee" of €0.50 will be charged for each first annual install per year over a 1 million threshold for iOS apps distributed from the App Store and/or an alternative app marketplace.
Notarization for iOS Apps: All iOS and iPadOS apps have to be notarized, regardless of where they are distributed. This includes checks for malware and a base level of human review.
New App Installation Sheets: Users will see a new sheet design for app installation from other sources, containing basic details about the app.
Third-Party Payment Options: Developers can offer third-party payment processing or link out for purchasing options.
Expanded App Analytics: Apple is providing over 50 new reports for developers to track engagement, commerce metrics, app usage, and more, available worldwide.
New Default Browser Picker: A new default browser picker in Safari for EU users, allowing them to choose an alternative browser. More importantly, those browsers don’t have to use WebKit. That means Chrome can now run its native mobile browser.
The biggest change is that developers will have the option to distribute their iOS apps through alternative app marketplaces or to use alternative payment processors within their apps on the App Store. This is essentially what developers like Epic Games have been asking for. Except, Epic’s CEO, Tim Sweeny is not at all happy. He shared his unhappiness in a post on X.
There’s always a catch
The problem for Sweeney (and for other large developers) is that Apple is imposing a new "Core Technology Fee" of €0.50 for each first annual install per year over a 1 million threshold. This fee applies to developers who opt into the new terms and means they will pay the fee for any apps distributed from the App Store, as well as any alternative app marketplace—including free apps. That means Meta, which owns Facebook, Instagram, WhatsApp, and Messenger, would pay that amount for each of those apps, for every single user in the EU.
You can’t set up an alternative marketplace without agreeing to the new terms, but why would a company like Meta want to start paying hundreds of millions of dollars for apps it doesn’t charge for?
It definitely seems like Apple is complying with the letter of the law while ensuring that no one takes advantage of the new option. That, of course, is exactly how Apple would like it—things stay pretty much exactly the same, while getting regulators off its back.
Then again, it’s not clear this will accomplish the later.
Considering that the only companies that realistically have a chance to build, market, and distribute an alternative app marketplace are companies like Meta and Epic—which clearly surpass the 1 million download threshold—the clear target of the Core Technology Fee is ensuring that it is economically unviable to host an alternative app marketplace. Since the majority of apps are free with in-app purchases, the burden of paying €0.50 for each unique installation, every year, forever, just does not make sense.
Apple is giving developers a choice that is really no choice at all (you can stick with the system we build, or you can opt out and essentially sabatoge your business).
A bad look for everyone
Ultimately, no one really looks that great. Mostly, that’s because it doesn’t seem like anyone is spending any effort thinking about what should be the most important thing: The experiene of users.
Sure, everyone uses words that sound like they care about users, without actually making the experience better for anyone. For example, take this quote from Apple Fellow, Phil Schiller:
“The changes we’re announcing today comply with the Digital Markets Act’s requirements in the European Union, while helping to protect EU users from the unavoidable increased privacy and security threats this regulation brings. Our priority remains creating the best, most secure possible experience for our users in the EU and around the world.”
It’s clear that Apple is very unhappy about being forced to make these changes. No company wants to be forced to do anything, but it’s interesting that—in some ways—Apple brought this on itself by refusing to give any ground at all. Now that the DMA is law, Apple is still expressing its pure disdain by making it clear that not only is this law a bad idea, but that it will make the experience worse for users.
Specifically, Apple talks about privacy and security. Those are real concerns, but there are very few people who will ever use an alternative app marketplace. Sideloading, or installing apps from outside of the platform app store, has been an option on Android for years, but almost no one does it.
From a users’ perspective, it’s just not worth it. Downloading apps from Apple’s App Store will always be easier and more seamless. Most users already have a credit card on file, and they don’t have to jump through any hoops or set up payment on a third-party store.
Ultimately, the most interesting thing about these changes—taken with Apple’s previous update to allow developers in the U.S. to add a link to alternative methods of making purchases or signing up for a subscription—is that the conversation was never about giving users freedom over the software on their devices. It has always been about the money.
The thing developers care about the most is not paying Apple 30 percent of all transactions on the iPhone. Apple is never going to make that change on its own, so developers have lobbied lawmakers to get them to pass laws to force Apple’s hand. Those efforts haven’t been successful on this side of the Atlantic, but the EU has been eager to impose regulations on big tech companies.
Of course, neither the developers or regulators are really thinking about the thing that actually matters. They’re thinking about making more money and exerting control. That doesn’t make the experience any better for anyone.
The message is clear
Mostly, for Apple, I think this is about sending a message. The company is telling developers that they can stick with the system Apple built and keep paying the commission, or you can opt out and essentially sabatoge your business. It’s putting them on notice that even when forced to make changes, it will ensure they don’t actually change much of anything (despite the 10,000 or so words needed to explain the new terms).
I think Apple is also sending a message to other governments. The last thing it wanted is for, say, the U.S. Congress to look at what the EU is doing and get any ideas. It’s letting lawmakers know that Apple has very smart lawyers who will figure out how to comply with your rules in the way that continues to benefit Apple.
More coverage of Apple’s changes:
Sideloading is coming to the iPhone… in Europe (The Verge)
Apple finally responds to the DMA (The New York Times)
A detailed explanation of the changes Apple is making (MacStories)
Apple lowers commissions on App Store in EU (Bloomberg)