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Apple Intends to Allow Competing App Stores on iPhones in EU

Apple Inc. is planning to enable alternative app stores on its iPhones and iPads in the European Union as early as late next year to comply with new European competition legislation that it had battled.

Opening up to other app stores might pose a significant threat to Apple’s rapidly increasing services industry. Still, competitors would first have to convince consumers to abandon the security and convenience of using Apple’s own store.

The severity of the sanctions is determined by how the US corporation complies with extra obligations under European law, known as the Digital Markets Act. Microsoft Corp, Meta Platforms Inc, Inc, and other app store providers could benefit from Apple’s proposed shift to competitor marketplaces.

A consortium of app developers stated that Apple must completely comply with the DMA in order to open up competition properly.

Apple customers may eventually be able to install programs without using the company’s App Store, according to reports. Apple, on the other hand, has not decided whether to comply with other parts of the law, such as allowing for other payment systems to its own.

Allowing its payment tool to be circumvented would jeopardize Apple’s billions of dollars in income from charging up to 30% commission on App Store transactions.

According to Sensor Tower, a mobile analytics business, about $10 billion in transactions passed through the App Store last year. At least 70% of the money is allocated to app developers.

Angelo Zino, a CFRA stock analyst, estimates that competing app shops in Europe will affect less than 0.2% of Apple’s overall sales.

“The ultimate impact will be minimal as most consumers are creatures of habit and are very satisfied with the platform. We expect a majority of consumers will keep the status quo by utilizing (Apple’s) existing app store,” he said.

The European Union’s DMA is planned to go into effect in mid-2024. In order to increase customer choice, the legislation requires large IT businesses to open their systems to competitors. The regulation punishes the major gatekeepers with fines of up to 10% of yearly global turnover for infractions.

Apple has stated that permitting sideloading, which bypasses the App Store, exposes customers to security and privacy risks. However, several authorities and critics, like “Fortnite” creator Epic Games, believe those fears are exaggerated.

Epic CEO Tim Sweeney tweeted that the United States Congress must implement legislation similar to DMA, or it “would leave American developers in serfdom.”

For years, Alphabet Inc’s Google has permitted sideloading on phones running its Android operating system. However, in order to take advantage, users must modify settings and swipe past security warnings, which means that 90% of downloads continue to come from Google’s official app store, Epic claims in court.

The new EU rules went into effect in early November, potentially forcing Apple to allow consumers to access third-party app stores and allow program sideloading on iPhones as well as iPads, among other significant reforms aimed at making the digital economy more equitable and competitive.

“The DMA will change the digital landscape profoundly. With it, the EU is taking a proactive approach to ensuring fair, transparent, and contestable digital markets. A small number of large companies hold significant market power in their hands. Gatekeepers enjoying an entrenched position in digital markets will have to show that they are competing fairly. We invite all potential gatekeepers, their competitors or consumer organizations, to come and talk to us about how to best implement the DMA,” said Margrethe Vestager, executive vice president, in a statement accompanying a Commission press release.

Apple stated in March, prior to the law’s enactment, that it was “concerned that some provisions of the DMA will create unnecessary privacy and security vulnerabilities for our users.”

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