Developers push Apple's new plan for the App Store in Europe
After 15 years dictating how apps are distributed on iPhones, Apple has been forced to take marching orders from European regulators. A new law to boost tech competition demands that Apple open up its devices to competing app stores and payment options.
But app makers say Apple's response to the law, which aims to give consumers and developers more choices, is a misstep. They argue that there are new fees and rules hidden inside the plan that make the changes the law was intended to make extremely costly and risky.
The response is the latest chapter in a long-running battle between Apple and app makers. Apple says it must keep a tight grip on the App Store to ensure quality and security, while many developers say the company rules too harshly and tries to pressure them for fees and access to its services like Apple Music and Apple Music. Abuses its power to thwart competition. Salary.
European regulators largely sided with developers in writing the Digital Markets Act, a 2022 law that requires Apple to give app makers options to sell to iPhone and iPad users. In response to the March deadline for compliance, Apple told developers last week that they essentially had three options in the European Union, where about 450 million people live.
They can remain on the status quo App Store system and continue paying Apple a commission of up to 30 percent on all sales. Alternatively, they could reduce their commission to 17 percent, while charging a new 50-euro-cent fee on each download above one million annually. Or they can avoid Apple's commission by distributing through competing app stores while still paying Apple's download fee.
After doing the math, many developers said Apple was offering a worse option. The creator of a free app with 10 million downloads per year will have to pay Apple about $400,000 per month because of the new 50-euro-cent fee that the creator of a free app with 10 million downloads a year opted to distribute through a competing App Store, several people reported. , according to a fee calculator That was released by Apple. This essentially guarantees that they will stick with the existing App Store model, where they can distribute for free instead of selling through alternative marketplaces.
Spotify, the streaming music app that filed an antitrust complaint against Apple in Europe, said it may abandon plans to add credit card payments for audiobooks and subscriptions because of the fees.
Fortnite creator Epic Games, which sued Apple in 2020, said it had major questions about the plan to release a new game store because Apple's plan would give it the power to vet and approve competing app stores . And Hey.com, an email and calendar service, said the proposal reversed its plan to distribute software directly to users, which Apple is not making possible.
“The European Commission cannot make sense because it does not change the fundamental dynamics,” said David Heinemeyer Hansson, one of the founders of Hey.com. “Apple has made the provisions so toxic and the bar so high that it's clear no one should be using it.”
The growing criticism will test how aggressively the EU will implement its historic new digital policy. Executives from dozens of app companies have already called on EU regulators to reject Apple's proposal.
Apple said the policies comply with EU law while limiting potential risks to users. “Apple is focused on building the most secure system possible within the requirements of DMA,” the company said in a statement.
Andreas Schwab, a member of the European Parliament who helped write the Digital Markets Act, said the Commission will have to consider Apple's proposal after March 7, when the rules go into effect. Should the European Commission launch a formal investigation, it could spark a protracted legal battle between EU regulators and one of the world's biggest tech companies.
“Everything is about money,” Mr. Schwab said. “People who complain want to make more money, and Apple wants to make money with its App Store.”
The response comes at a critical moment for Apple. The US Justice Department is considering antitrust charges against Apple for anticompetitive business practices, a case that could force the company to make more policy changes. Apple is also facing slow sales of iPhone, iPad and Mac. Wall Street analysts expect the trend to continue when Apple reports Thursday quarterly results for the three months ended in December. This week, the company is also releasing its first new product in nearly a decade, an augmented reality device called Vision Pro.
The Digital Markets Act aims to create more competition in a digital economy dominated by the largest tech companies. These big platforms, which include Amazon, Apple, Google, Meta, Microsoft and TikTok's owner, ByteDance, now need to use their dominance in an area like smartphones, social media or e-commerce to bring users to the box and Undermining rival services will face new limitations. ,
A spokesman for the European Commission, the executive arm of the 27-nation bloc, said it would not comment on Apple's policy change before the March deadline. However, he noted that Apple and other large tech platforms were urged to review any changes they make to comply with the DMA, to ensure the businesses most likely to be affected are to ensure that the changes will not create new anti-competitive problems.
Apple said it spoke with many developers before releasing its plan, but Apple did not extend its outreach to some of its sharpest critics, such as the Coalition for App Fairness, a Washington trade group that has about 80 members. Which includes Spotify and. Match Group, creator of Tinder.
Rick VanMeter, executive director of the Coalition for App Fairness, said, “If they were serious about complying with the law, they would have done this and tried to get people on their side for their announcement.”
Apple said it had contacted more than 1,000 developers after the new policy was released last week and would hold sessions to answer their questions. The company said 99 percent of developers in the EU will “reduce or maintain” their outstanding fees, and it pointed to support from people like Justin Kahn, one of the founders of video game streaming service Twitch. He further added, “Apple is making big concessions and game developers now have more freedom than ever.” x,
Others disagreed. Andy Yen, chief executive of Proton, a Swiss company that provides encrypted email and Internet services, said Apple was offering the wrong alternative to the current App Store fee structure. He said the new option is so economically prohibitive, especially the 50-euro-cent technology fee, that “nobody in their right mind is going to choose it.”
Mr Yen said the change would cause Proton millions of dollars in losses, as many of its users use its free services. Even though it wants to try alternative app stores and payment methods, the company will have no choice but to stick with Apple's existing terms, he said.
Apple's new system could overturn the business models of many developers. According to app economy research firm Data.ai, more than 260,000 apps use the so-called freemium model, where users pay nothing to download an app but have options to purchase premium features.
Because only a small portion of customers pay for content or accessories, developers say they cannot charge a 50 percent fee for each download.
Apple has also included conditions in its new policy that prevent developers from reversing their decisions. Once a company like Spotify or Proton decides to adopt Apple's new fee structure, there's no going back.
“It's designed in such a way that switching to a new system is a big risk for your business,” Mr Yen said. “It's a huge deterrent.”