In a significant concession to comply with the European Union’s Digital Markets Act (DMA), Apple has announced a major shift in its App Store policies. The tech giant will now allow developers operating in Europe to distribute their apps directly to consumers through their own websites, bypassing the App Store. This move is aimed at fostering competition and creating a level playing field for smaller rivals, as mandated by the DMA.
The changes, applicable only in the EU, could impact Apple’s lucrative App Store revenue model, where it charges developers fees of up to 30%. While the adjustment may limit Apple’s ability to extract fees, the company’s App Store is expected to remain a substantial revenue source, albeit with certain conditions attached.
Starting in the coming months, developers in Europe can offer apps directly to customers from their websites. However, developers must still adhere to terms and conditions set by Apple and obtain authorization. Apple has also introduced a “core technology fee” of €0.50 per user account annually, even if developers choose not to use Apple’s App Store or payment system.
Susannah Streeter, Head of Money and Markets at Hargreaves Lansdown, noted, “While the App Store won’t be able to be milked as freely, it’s still likely to remain a considerable cash cow for some time as there are strings attached to this peace offering from Apple.”
The DMA aims to regulate major tech players like Apple, Amazon, ByteDance (owner of TikTok), Meta Platforms, Google, and Microsoft, creating fair competition for smaller rivals. Apple’s decision to open up its ecosystem in Europe comes amidst ongoing criticism regarding its compliance efforts.
Notable changes include allowing developers to set up alternative app marketplaces immediately and providing flexibility in designing in-app promotions, discounts, and deals when directing users to complete transactions on their websites.
This move in Europe represents a shift in Apple’s longstanding approach of maintaining a tightly controlled “walled garden” ecosystem. The announcement comes at a crucial time for Apple, grappling with revenue challenges and increasing competition from other tech giants.
Apple’s stock showed a modest increase following the announcement, with the company’s shares up 0.6% on Tuesday afternoon. The changes also follow Apple’s recent concession to Epic Games, allowing the inclusion of its game store on iPhones and iPads in Europe.
As regulatory pressures mount, Apple’s willingness to adapt its App Store policies indicates a recognition of the evolving landscape and a proactive response to the DMA’s requirements. Apple’s stock performance and strategic decisions in the coming months will likely be closely watched in the tech industry.
