It’s been a long time coming…
Apple and the European Union don’t get along too well…and that’s putting it mildly.
USB-C-gate has come and gone, but now Apple has been forced into far more systemic changes that strike at the core of Apple’s ecosystem. Last week they announced sweeping changes to iOS, Safari, and the App Store in the European Union – and trust me, these changes were not made by choice!
Apple is used to getting its way and when they don’t, they have a habit of acting up – almost like a petulant teenager. This past week has seen no exception to that rule as I’ll hopefully try to explain.
I say hopefully as this story has taken me a lot of time to try and understand what the heck is going on. It is still a work in progress so details may change – but I’ll do my best to explain this mess…at least as best as I understand it!
Wish me luck!
DMA changes it all
The EU’s Digital Markets Act (DMA) comes into effect in March and to comply with that they have to be seen to allow alternative app stores & payment methods on iOS devices. There is nothing new about the news itself – Apple has been bracing itself for years for this moment but had decided to kick the tin down the road a bit and stall.
Well, the tin-kicking & stalling stops in a few weeks and here is how it’s been left.
Looking first at the App Store, as I understand it, there are three ways that these reforms will play out…
- A developer can make no changes and stay as part of Apple’s App Store and continue to pay the same taxes.
- Leave Apple’s App Store altogether and choose another marketplace
- Developers are free to create their own App Stores (marketplaces)
If you listen to the EU and the pro-change crew (and I’m not taking sides here) opening up the playing field has to be good for consumers – i.e. no monopoly can be good. But as ever, there are two sides to the coin and the flip side of this particular coin is that it has the potential to open up the iPhone to all sorts of potential dangers.
Until this change as you know all apps on your iPhone had to be downloaded via the App Store with all the security protocols that come along with it. With this new open platform, there will only be so much that Apple can do to ensure complete safety for users – security for iPhone users in the EU will now be under a heightened and increased threat.
The only comparison I can think of is the Mac. Whilst the Mac is still pretty much a bug, scam and malware-free environment, problems can occur because we are free to download apps from the web and outside of the macOS App Store.
The main line of defence that the company has to protect its devices & users is notarising which is a way for Apple to digitally mark an app release that’s been signed by a registered Apple developer.
Is Apple losing their Grip?
Going by the official press release from Apple they are being forced to make changes to two other key areas.
Changes to iOS include new options for distributing iOS apps and also allowing for alternate App Stores and browsers to be installed on iPhones and iOS devices.
These new or alternate app stores will be called app marketplaces as Apple is keen to have a clear mark in the sand that will help define one from the other. I’m sure in the EU there will be a few of the large players queuing to set up new marketplaces as let’s face it, Apple isn’t short of enemies!
The Apple vs Epic battle was essentially all about this exact thing.
Before setting up a marketplace Apple will require marketplaces to show proof of a substantial line of credit which makes sense. Without that, unscrupulous companies could set up a marketplace and simply make off with all the money. It seems Apple is doing all they can to keep things safe even if they are being forced to play with one hand behind their back.
Part of these changes will mean that upon setting up a new iPhone in the EU you will now be offered alternative browsers to Safari to have as the default browser – although you will find yourself being warned within an inch of your life if you do decide to swap. You’ve been warned.
One other key area of change includes the Wallet App and Apple Pay. Whereas until now all apps that used Apple’s tap-to-pay had to use Apple Pay from now on users can choose a third-party tap-to-pay app.
Show me the money
As is often the case money sits at the root of much of the detail of why these changes were ever first dreamt up.
For as long as I can recall Apple Tax has been a thing for developers. I’m sure you’re aware of the 30% fee or tax that developers have historically had to pay Apple for their apps to be distributed via the App Store.
Under the new announcement, these fees have been dramatically slashed. Smaller developers will now pay 10% (down from 17%) and larger developers will pay only 17% down from the 30% I just mentioned. Those fees are subject to a 3% payment processing fee – but even so, they are massive reductions.
It’s not the smaller developers that Apple is concerned about – it’s the largest ones – for instance – Spotify.
We know how acrimonious the air is between Apple and Spotify so it will now be interesting to see if Spotify sticks to its guns and lift its app from Apple’s App Store or choose to put it in one of the new marketplaces – or even start their own.
Either of those latter two options would hurt them financially though.
Apple has stated that the first 1 million downloads from a marketplace are free but after that developers will pay €0.50 for each first annual install per year over that 1 million threshold – Apple are calling this the Core Technology Fee.
To put some context to this Spotify has about 40 million iPhone users within the EU so that €0.50 fee is going to mount up pretty damned quickly. One positive for Spotify though would be that they’d able to sell its subscriptions separately. It’s also worth noting that the decision to opt out of Apple’s App Store is a one-and-done kind of deal. If you leave the door gets shut firmly behind you – there is no going back.
If that isn’t Apple putting up its middle finger, then I don’t know what is.
As for the idea of creating your own marketplace, the news is even worse. In that scenario, there is no grace period. The €0.50 rule applies from the first download – there is no first 1 million rule.
Another potential flaw I thought of is for the odd indie ‘bedroom warrior ‘that develops an app that goes viral. Let’s say you have an app on a marketplace that takes off – suddenly you’ll be looking to pay €0.50 per download, per year to Apple. Success it seems comes at a price.
Apple has created a fee calculator tool to try and help developers work out which route is best for them to take.
Developers saw the software & paperwork on these features for the first time last week when the beta for iOS 17.4 was seeded. As the DMA takes effect in March I can act as your soothsayer to inform you that iOS 17.4 will be released in full by March. Yes…I am a true genius!
The eyes of the digital world will be on Apple & the EU in March.
Will Apple’s fears be vilified as iPhones become bloated with malware and junk or will it have been proven to be just a smokescreen designed to scare off regulators and officials?
Losing control of Safari as the default browser is costly enough for Apple – but these other changes to tap-to-pay and the App Store represent massive changes to the essence of how Apple has built the core of their business.
The problem for Apple is though that as the digital world watches what unpacks in the EU other enforcers from other countries may begin to write and enforce their policies and mandates.
Is this a sign of change for good? Are the good times over for Apple or will we be the ones to eventually suffer?
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