Apple might let you use other app stores or install apps from different places on your iPhone. The European Union is encouraging this, just like when they made Apple use USB-C ports. Now, there’s a new law called the Digital Markets Act, and it might make Apple change how it runs the App Store. Let’s find out what the law says and what Apple plans to do because of it.
HIGHLIGHTS
- Apple admits it will have to make business changes owing to the EU’s DMA rules.
- This may affect communications related to alternative purchasing mechanisms and the distribution of apps outside of the App Store.
- Analysts expect Apple will initially allow 3rd party App Stores in Europe.
How EU’s Digital Markets Act affects Apple
The European Union named six major tech companies on September 6th as the gatekeepers because they “provide an important gateway between businesses and consumers in relation to core platform services.” Apple serves as a gatekeeper by acting as a conduit between users and other businesses, such as publishers and developers, through its App Store.
Apple and other gatekeepers were handed a list of dos and don’ts by the EU, and they had six months to comply. This implies that Apple must:
- Allow 3rd party apps and app stores to operate with it on its devices in “certain conditions”.
- Allow these parties to access data they generate while operating on Apple’s platforms like its app stores and OS.
- Allow app developers to conduct payment and other transactions outside the confines of Apple Walled Garden.
On Apple devices, it is unable to prevent customers from removing the preinstalled applications. It will not be permitted to give preference to its own services over rival offerings. EU, a staunch supporter of privacy, demands that Apple refrain from using its platforms to track end users for the sake of targeted advertising.
The EU will fine Apple and any gatekeepers that do not comply with the regulations up to 10 percent of the company’s annual worldwide turnover, or up to 20 percent if the brands violate the regulations on a regular basis. In addition, there is a recurring penalty of up to 5 percent of the average daily turnover that they must pay.
The deadline date for Apple and others to comply is March 7th, 2024.
Signs of Apple complying to EU’s DMA
Regarding risk factors for the fiscal year 2023, Apple has modified its standard language in its annual 10K filing report to the US Securities and Exchange Commission. As a result of legislative efforts that have an impact on the App Store, such the EU Digital Markets Act, which the Company must comply with by March 2024, it states that it “expects to make further business changes in the future.”
Apple portends these changes may adversely affect its revenue and overall business.
Meanwhile, Techcrunch reports that Morgan Stanley analysts believe Apple would “likely begin 3rd party app stores on device in Europe” and that the company is “well positioned to handle this thanks to the security, centralization, and convenience of the App Store.”
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