Apple has made a significant change to its App Store in Europe in response to the Digital Markets Act (DMA) enforced by the European Union. The new rules mean that software developers operating in Europe will be able to distribute their apps directly to customers via their own websites, rather than through the App Store.
This move may affect Apple’s high profit margins and steady stream of revenue, as it charges developers fees of up to 30% to distribute their apps through the App Store. The changes only apply to the European Union and aim to create a level playing field for smaller rivals and more competition for Europeans. However, developers must still meet Apple’s terms and conditions and be authorized developers. In addition, Apple has introduced a “core technology fee” of 50 euro cents per user account each year, even if developers opt not to use Apple’s App Store or payment system. Apple’s decision to open up its ecosystem comes at a sensitive time for the company, as it is struggling with shrinking revenue and weak demand for its smartphones in China.
The tech giant has also faced criticism from rivals that its compliance efforts are inadequate. As part of the changes, users in the EU will be able to install apps from alternative app marketplaces in iOS 17.4 and later. Users will be able to download an alternative marketplace app from the marketplace developer’s website. Apple’s stock was up 0.6% following the announcement of the changes, reducing its loss in 2024 to 10%. The company has also taken a step back from its feud with Epic Games, allowing it to put its own game store on iPhones and iPads in Europe. Apple has said it will appeal an EU antitrust fine of 1.84 billion euros ($2.01 billion) handed to it last week for thwarting competition from Spotify and other music streaming rivals via restrictions on the App Store. In conclusion, Apple’s compliance with the DMA will change the way developers distribute their apps in Europe and may affect Apple’s revenue streams. The changes aim to create more competition for Europeans and level the playing field for smaller rivals.