Apple Overhauls App Store in Europe, in Response to New Digital Law

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Since Apple introduced the App Store in 2008, it has tightly controlled the apps and services allowed on iPhones and iPads, giving the company an iron grip on one of the digital economy’s most valuable storefronts.

Now Apple is weakening its hold on the store, in one of the most consequential signs to date of how new European regulations are changing consumer technology.

To comply with a European Union competition law taking effect on March 7, Apple on Thursday announced major changes to the App Store and other services for consumers in Europe. Users of iPhones and iPads in the 27-nation bloc will for the first time be able to use alternative app stores to download games, productivity tools and other apps. Banks and shopping services can offer competing payment methods inside their apps. People who buy new iPhones in the future will also see a new menu for downloading alternative browsers to Apple’s Safari, such as Chrome and Firefox.

The changes are some of the most tangible examples of how a checkerboard of laws and regulations is now fracturing people’s technology experiences based on where they live. In China, government rules force Apple to block apps like virtual-private networks, known as VPNs, which would give users access to the unfiltered internet. In Europe, customers will now have access to competing app stores and other services. In the United States, where there are fewer laws and regulations, Apple and other tech giants have more flexibility to operate as they please.

The shifts in the App Store stem from a 2022 law passed by the E.U. called the Digital Markets Act. The far-reaching law was aimed at loosening the power of the world’s largest tech companies in areas like e-commerce, social media and messaging. Amazon, Meta, Google and Microsoft have also announced changes to comply with the new rules.

“The changes we’re announcing today comply with the Digital Markets Act’s requirements in the European Union, while helping to protect E.U. users from the unavoidable increased privacy and security threats this regulation brings,” Phil Schiller, who leads the App Store, said in a statement.

Europe accounts for about 6 percent of Apple’s total App Store sales, which are estimated to be $24 billion annually worldwide.

E.U. regulators have long raised alarms that Apple abuses its control over the App Store to stifle competition. The Silicon Valley company has argued that its gatekeeper role protects customers from malware, privacy breaches and flawed apps. But app developers like Spotify and Epic Games, the maker of Fortnite, have said Apple misuses its power by demanding they pay high fees and forcing them to use underlying technology that it makes.

For years, Apple has resisted making the kinds of changes it announced on Thursday. It is unclear if the moves will satisfy European regulators who have vowed to aggressively enforce compliance with the Digital Markets Act.

Apple said it would maintain some oversight of new marketplaces and apps working outside its App Store, but warned that the new E.U. policies would give bad actors a new path to distribute malware and defraud customers. The company said that it created a system to monitor all iOS apps, approve alternative app stores and track alternative payment systems.

Apple said developers would also be charged a fee of 50 euro cents for every download of their app after it has been downloaded 1 million times or more within a 12-month period, regardless of whether it was through the App Store or an alternative. This will also apply to free apps, but not apps distributed by government, education and nonprofits.

The new rules could dent Apple’s finances. The App Store’s policy of taking up to 30 percent of developers’ sales has made it a critical piece of the company’s nearly $400 billion business. But it has also opened Apple to criticism and regulatory scrutiny because many developers complained that the fees were unjust.

In Europe, Apple said that developers using the App Store would have the option to continue using the existing commission terms, or move to a new fee structure. This would include a reduced commission fee of up to 17 percent for digital goods and services. An additional fee of 3 percent would be charged to developers who use Apple’s payment system.

Apple said its fees are to cover the costs of developing its software and providing tools to developers.

Developers who distribute their app through a competing App Store would not be subject to any Apple commission. Developers who provide links to complete payments outside their apps can also forgo the fees.

Developers would also be able to avoid what some of them have said is a cumbersome review process by Apple of the apps it distributes in its store. But the company has created a new system, which it calls notarization, to maintain some control over the apps distributed across iPhones. Every iPhone app will include an installation key to provide Apple with information on when it was installed and allow the company to do automated scans for malware.

As part of the notarization process, apps will provide Apple with descriptions and screenshots of the services they offer, as well as the name of the developers. Apple will share that information with iPhone users before an app is downloaded.

Apple also introduced a new feature for customers to use alternatives to its Wallet app for mobile payments, an increasingly common form of payment for public transportation, restaurants and cafes. Major banks and businesses like PayPal can now offer competing services.

Apple has challenged some elements of the new European law, including a requirement that would open its messaging service, iMessage, to work more smoothly with Android devices. The company has argued that iMessage isn’t subject to the requirements because it is free to customers.

The E.U. has not made a final decision on the messaging issue.

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