To comply with EU law, Apple opens door to third-party app stores in Europe – SiliconANGLE

Apple Inc. today announced changes to iOS, Safari and its App Store in the European Union to comply with the EU’s Digital Markets Act, most notably allowing for third-party app stores in Europe in the upcoming iOS 17.4 update scheduled for release in March.

The changes include more than 600 new application programming interfaces, expanded app analytics and new features for alternative browser engines. The changes are set to reshape how apps are distributed and how payments are processed on iOS platforms within the EU.

The headline change — allowing third-party app stores — isn’t one that Apple wanted to make but was forced to do so. Reports that Apple was considering allowing third-party stores date back to 2022 when the European Parliament and Council passed the Digital Market Act.

The act is seen by the EU as a way to end what it calls unfair practices by companies that act as gatekeepers in the online platform economy. A company falls under the act’s purview only where it has a size that affects the internal market, having achieved a certain annual turnover in the European Economic Area and providing a core platform service in at least three EU states.

Apple was subsequently deemed to be a “gatekeeper” company that is bound by law in September. Other companies also deemed gatekeepers included Alphabet Inc., Amazon.com Inc., TikTok owner ByteDance Ltd., Meta Platforms Inc. and Microsoft Corp.

Fast forward to January 2024, and though Apple is moving to comply with its legal requirements in the EU, it’s not doing so quietly, nor arguably in a simple fashion. Instead of simply allowing third-party app stores, Apple said it is “introducing new safeguards that reduce — but don’t eliminate — new risks the DMA poses to EU users.”

For a new third-party app store to be allowed on an iPhone, Apple requires developers to provide a €1 million ($1.08 million) “letter of credit” from an A-rated financial institution, according to 9to5Mac. Third-party marketplace developers will also be required to pay a €0.50 “Core Technology Fee” for each first annual installation of their marketplace app.

Along with finally allowing third-party apps in the EU, Apple also announced changes in areas such as browser choice. Starting with iOS 17.4, Safari users in the EU will be presented with a new choice screen when they first open Safari that will allow them to choose a default browser from a list of options. Like all of Apple’s announcements today, it’s not doing so willingly and is instead making the change to comply with the DMA.

Apple’s App Store is also getting an overhaul in the EU to comply with the DMA, with Apple now allowing developers to use their own payment service providers within their apps. In addition, apps in the EU can now allow users to purchase digital goods and services on a developer’s external website.

Although allowing third-party app stores is a big change, allowing third-party payment options is up there in terms of significance. Apple, like Google LLC, restricts how purchases can be made through apps offered in their respective stores while taking a 30% cut, a process at the core of the Epic Games Ltd. suite against Apple in 2021. While Epic Games subsequently lost its case against Apple, including an appeal, it won a case against Google on similar grounds.

That Apple is now providing third-party payment options and allowing third-party app stores in Europe indicate that it’s more than capable of doing so, raising questions about why it can’t do so in other jurisdictions.

The announcement also comes ahead of an expected antitrust case against Apple from the U.S. Department of Justice later this year. The lawsuit will reportedly seek to determine whether Apple used unfair tactics to protect the iPhone’s market share, restrictions on Apple Watch access, access restrictions on Apple’s Tap to Pay technology and competition concerns in other areas.

Image: Apple