Author: Foo Yun Chee
BRUSSELS (Reuters) – Apple made a major concession on Tuesday in its battle to protect the dominance of its App Store on iPhones and other devices in Europe, saying developers will be free to distribute their apps directly to users.
Apple announced the changes in line with the European Union’s Digital Markets Act (DMA), which came into force last week. The changes could threaten the high profit margins and steady stream of revenue Apple has come to rely on from its app store, where it charges developers fees of up to 30%.
The changes, which affect only the European Union, come amid ongoing criticism from rivals that Apple’s compliance efforts are falling short.
Starting this spring, software developers operating in Europe will be able to distribute apps to EU users directly from their websites instead of through the App Store.
Developers must still meet the terms and conditions set by Apple and be an authorized developer. Apple has also introduced a “core technology fee” of 50 eurocents per user account each year, even if developers choose not to use Apple’s App Store or payment system.
The DMA aims to rein in Apple, Amazon, TikTok owner ByteDance, Meta Platforms, Alphabet’s Google and Microsoft and create a level playing field for smaller competitors and ultimately more competition for Europeans.
“To reflect the DMA changes, users in the EU can install apps from alternative app markets in iOS 17.4 and later. Users will be able to download an alternative market app from the marketplace developer’s website,” Apple said on your website. iOS refers to the software platform that powers Apple’s iPhone and iPad devices.
The opening of Apple’s ecosystem in Europe, which the company has long kept as a highly profitable “walled garden,” comes at a sensitive time for the tech giant.
The iPhone maker is struggling with falling revenue and weak demand for its smartphones in China. In January, Microsoft dethroned Apple as the world’s most valuable company, and investors view Apple as lagging behind its big tech rivals in their race to dominate artificial intelligence technology.
Shares of Apple rose 0.6% on Tuesday afternoon, paring its 2024 loss to 10%.
The changes announced on Tuesday include allowing developers to set up alternative app markets to offer a catalog made up exclusively of developers’ own apps with immediate effect.
Developers can choose how to design in-app promotions, discounts, and other offers when directing users to complete a transaction on their website instead of using Apple’s template.
Under pressure from regulators and the DMA, Apple last week took a step back in its dispute with Epic Games, allowing it to set up its own iPhone and iPad game store in Europe. Violating the DMA can cost companies fines of up to 10% of their global turnover.
Apple also said it would appeal a 1.84 billion euro ($2 billion) EU antitrust fine handed down last week for preventing competition from Spotify and other music streaming rivals through App Store restrictions.
(Reporting by Foo Yun Chee in Brussels; Additional reporting by Noel Randewich in San Francisco Editing by Mark Potter and Matthew Lewis)