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Apple Isn’t Ready to Release Its Grip on the App Store

In response to new rules, the iPhone maker announced drastic changes for users in Europe. But criticism is mounting that Apple’s new system only recreates old problems.

The Apple Inc. logo on an Apple storefront

Photograph: Krisztian Bocsi/Bloomberg/Getty Images

Politicians in Brussels have for years debated how best to loosen Big Tech companies’ grip over their closely guarded marketplaces. But it was only this week that Apple announced sweeping and drastic changes for its European users. For the first time, new EU rules have forced the company to entertain the idea that you can shop for apps outside of Apple’s own App Store, as well as allow browsers other than Apple’s own Safari to run on iOS with their full suite of features.

Yet critics say those changes, although drastic, do not go far enough to comply with new EU rules, and a new fee system for developers reveals how Apple is not yet ready to release its grip on the App Store.

“The new fees and restrictions simply reinforce Apple’s hold over its ecosystem,” Andy Yen, founder and CEO of Swiss encrypted email and VPN provider, Proton, said in response to the changes.

For more than a decade, iPhones have acted like tightly controlled supermarkets. Developers can’t just wander in and sell their wares. Instead, their app needs to pass a vetting process to sit on the shelves of Apple’s lauded App Store. If they want to sell something within their app to Apple users? That’s fine. But for the biggest developers, Apple is going to take a hefty 30 percent cut of every purchase.

Then, four years ago, lawmakers in Brussels started to listen seriously to complaints by the likes of Spotify about how Apple’s “tax” was stifling competition and limiting consumer choice as they browsed the App Store’s aisles. The European Union’s solution was a law called the Digital Markets Act (DMA). The idea wasn’t to break up Big Tech, former French digital minister Cédric O explained in a press conference in 2022. Instead the law was designed to break these platforms open.

On January 25, the EU seemed like it was finally starting to succeed in that mission, when Apple shared the first details of how the residents of the EU’s 27 member states will soon be able to download apps from alternative app stores onto their iPhones and iPads. Developers will also be able to use third-party payment providers inside apps offered by the Apple App Store for free, and will pay a reduced commission of up to 17 percent for in-app goods and services, the company said.

For Apple, the announcement marks a major change, and also demonstrates to other parts of the world what is possible with strongly worded regulation. The DMA gives the EU power to fine tech companies up to 20 percent of their global revenue for non-compliance. But the caveats in Apple’s announcement also drew sharp criticism.

Apple made it clear the company will maintain an element of control over the apps and new app stores operating on its devices—arguing this was necessary to reduce “privacy and security risks.” Apple said it will use a new system to track alternative app stores and payment systems, while charging developers a €0.50 ($0.54) “core technology fee” for every download—made through Apple’s App Store or an alternative—once an app is downloaded more than one million times.

“Especially for the big app developers with loads of downloads, who are the ones that really Apple make all their money from, that will rack up to a very high cost very quickly,” says Max von Thun, Europe director at Open Markets, a group dedicated to campaigning against monopolies. “This new cost structure, including the core tech fee, will disincentivize lots of developers from moving to the new system.” Less than 1 percent of developers would qualify for this fee, Apple said in its announcement. Government agencies or nonprofits are exempt.

The caveats sparked outrage from developers that had been hoping to benefit from DMA-inspired changes. “Allowing alternative payments and marketplaces seems positive on the surface, but the strings attached to Apple’s new policies mean that in practice it will be impossible for developers to benefit from them,” Proton’s Yen said in a statement. “Apple will continue stifling competition and innovation, and taking a cut even when developers opt out of its walled garden.”

Tim Sweeney, founder and CEO of Epic Games, went further, accusing Apple on X of “twisting this process to undermine competition and continue imposing Apple taxes on transactions they're not involved in.”

Sweeney has been battling Apple over its App Store rules in the courts and on social media rules for years. “Truly, Apple has no right to take any percent of any company’s revenue just because they made the phone people use to access the stuff,” he said back in 2020. But Epic suffered a setback in that fight earlier in January, when the US Supreme Court declined to hear Epic’s appeal in its legal dispute with Apple—essentially allowing Apple to put in place a system in the US that lets apps link out to purchase pages but still charges a 27 percent commission for payments made when users get there.

There’s uncertainty about whether Apple’s concessions count as complying with the DMA. “The App Store is very, very lucrative for them,” says von Thun, who believes there are question marks over whether these changes go far enough. “I would say this is basically their attempt to do as little as possible while, potentially, being compliant with the law.” A spokesperson for the European Commission, which enforces the new rules, said it did not comment on such announcements, adding the deadline for compliance was March 7.

“These changes comply with the DMA, and in the weeks and months ahead, we’ll continue to engage with the European Commission, the developer community, and our EU users about their impacts,” said Apple spokesperson Fred Sainz in a statement, adding the changes the DMA introduced in the EU resulted in a less secure system.

“We’re limiting these changes to the European Union because we’re concerned about their impacts on the privacy and security of our users’ experience—which remains our North Star.”

With just a matter of weeks until the EU’s March deadline, Apple and developers alike will soon find out whether the EU thinks those changes have gone far enough.

Credit belongs to : www.wired.com

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