(Photo by Berke Bayur/Anadolu Agency via Getty Images)
Apple’s plan to open up the App Store in the European Union is—ironically—angering critics who spent years demanding the company loosen its hold over the iOS ecosystem.
"This is yet another attempt to circumvent regulation," says the Coalition for App Fairness, whose membership includes Epic Games and Spotify, two companies that have fought Apple’s control over iOS app distribution.
On Thursday, Apple announced its plan to open the iOS ecosystem to comply with the EU’s Digital Markets Act, a law that requires “gatekeeper” companies, including Cupertino, to foster competition op their platforms.
However, the company's proposal still gives Apple plenty of power over iOS. For example, iOS apps sold on third-party marketplaces still need to receive a “notarization” from the company before they can be circulated. At the same time, third-party marketplaces will need to receive authorization from the company as well.
(Credit: Getty Images)The other issue deals with money. Under the status quo, Apple usually takes a 30% commission on all purchases made through the App Store. But the company’s new plan for the EU introduces an alternative model, allowing an iOS app to be sold on both Apple's App Store and third-party marketplaces.
In return, the app developer pays Apple a 17% or 10% commission, a potential 3% percent payment processing related cost, along with a new “Core Technology Fee.” This fee requires iOS apps distributed from the App Store and/or an alternative app stores “to pay €0.50 for each first annual install per year over a 1 million threshold.”
The result can be a sizable chunk of money, even for a free app. For example, according to Apple’s own estimated costs, a free app that receives 10 million downloads in the EU would need to pay Apple a $407,000 Core Technology Fee per month. Meanwhile, paid apps would need to hand over even more, exceeding the 30% commission Apple usually charges.
It’s why the Coalition for App Fairness says Apple’s plan fails to follow the EU’s Digital Markets Act. “Apple’s proposal forces developers to choose between two anticompetitive and illegal options. Either stick with the terrible status quo or opt into a new convoluted set of terms that are bad for developers and consumers alike,” the lobbying group says.
It’s now urging the European Commission to reject the plan. “This plan does not achieve the DMA’s goal to increase competition and fairness in the digital market – it is not fair, reasonable, nor non-discriminatory,” the coalition adds.
Epic Games CEO Tim Sweeney also railed against Apple’s plan, calling it an “illegal anticompetitive scheme rife with new Junk Fees on downloads and new Apple taxes on payments they don't process,” he tweeted on Thursday.
Epic Games plans on launching its own third-party iOS store for the EU, but Sweeney’s doubtful it’ll become a reality under Apple’s new plan. “They could block Epic from launching the Epic Games Store and distributing Fortnite through it, for example, or block Microsoft, Valve, Good Old Games, or new entrants,” he added in his tweet.
Despite the criticism, Apple indicated to PCMag it made sure to craft its policies to follow the EU's Digital Markets Act. "Teams at Apple spent months in conversation with the European Commission —and in little more than a year, created more than 100 new APIs and a wide range of developer tools," the company said in a statement. "Those changes reflect the work of hundreds of Apple team members who spent tens of thousands of hours creating the new capabilities necessary to comply with the DMA."
In an FAQ, the company added it expects “less than 1% of developers would pay a Core Technology Fee” under its new business model for the EU since it requires an app to receive over 1 million downloads. Developers can also choose to stick to the current commission fee. Meanwhile, the Core Technology Fee will be rescinded for apps registered to nonprofits or government entities.
The company plans on implementing the iOS changes for the EU this March.