Apple is allowing iPhone users in Europe to download products outside of its own App Store starting this March — or, we should say, the company is being forced to allow it by the new Digital Markets Act taking effect in the EU.
The law targets Big Tech companies considered to be “gatekeepers” and seeks to loosen their grip over digital marketplaces and spur competition. That means Apple must allow users to access alternative app stores and payment systems. But allowing is one thing. Making it easy? That’s another.
When you buy an Apple device, the sales pitch goes: you’re buying into a whole system of software and services. And the App Store has been at the center of that model, said Dan Ives, an analyst at Wedbush Securities.
“For Apple, it’s the crown jewel,” he said.
Because to reach the universe of 2.2 billion Apple devices in use, app developers have had to pay a 30% commission. An alternative app store would take a wrecking ball to that walled garden model — in theory.
“Apple is not gonna give away the keys to the kingdom, they’ll fight it, they’ll navigate it,” Ives said.
Last month Apple released its guidelines for third party app stores and payment systems in Europe and they are complicated by design, said Eric Seufert, an independent analyst with Mobile Dev Memo.
“I don’t think any developer will take this seriously,” he said.
Because those aiming to break free of Apple will still be subject to a review process and a 0.5 euro fee every time an app is downloaded, even if it’s free.
“The freemium business model is predicated on a zero cost of distribution,” he said. “That’s the only way the freemium business model works.”
Last week Meta CEO Mark Zuckerberg said the company would not build its own app store in Europe because of the onerous new rules.
But even if it did pencil out, app developers face a bigger hurdle in decamping to a third party app store said Daniel Newman, CEO of Futurum Group: Will consumers go there?
He said users probably prefer the convenience and predictability of a single centralized app store.
“Are you gonna go through that process of having to go around to save a few dollars, they’re gonna have more risk for security, data privacy,” he said.
It’s a case where what’s good for the consumer might not be good for competition, Newman said.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.