Apple has recently made significant changes to its App Store policies in the European Union (EU) following a probe by the European Commission. This move comes after the Commission accused Apple of violating the Digital Markets Act (DMA) by restricting app developers from informing users about alternative purchasing options outside the App Store. The changes are set to have a profound impact on how developers interact with their customers and how they promote their products.
The European Commission launched an investigation into Apple's App Store practices, alleging that the company was stifling competition by limiting developers' ability to inform users about cheaper alternatives available outside the App Store. Margrethe Vestager, Executive Vice-President of the European Commission, stated, "Our preliminary position is that Apple does not fully allow steering. Steering is key to ensure that app developers are less dependent on gatekeepers' app stores and for consumers to be aware of better offers".
The Commission's probe was part of a broader effort to enforce the DMA, which aims to create a fair and open digital marketplace. The DMA seeks to prevent large tech companies, often referred to as "gatekeepers," from abusing their market power to the detriment of smaller competitors and consumers.
Key Changes to the App Store Policy
In response to the Commission's findings and to comply with the DMA, Apple has announced several key changes to its App Store policies:
Communication and Promotion
One of the most significant changes is that developers in the EU can now communicate and promote offers for purchases wherever they want, such as via an alternative app marketplace. This change allows developers to inform users about cheaper purchasing options available outside the App Store, which was previously restricted by Apple's policies. According to Apple, "Developers may design and execute within their apps the communication and promotion of offers. This includes providing information about prices of subscriptions or any other offer available both within or outside the app, and providing explanations or instructions about how to subscribe to offers outside the application".
New Fee Structure
Apple will introduce two new fees—an initial 5% acquisition fee for new users and a 10% store services fee for any sales made by app users on any platform within 12 months of the app installation. These fees will replace the current reduced commission for all digital goods and services sold through the App Store. The new fee structure aims to address the Commission's concerns about the fairness of Apple's existing fees. The Commission had earlier criticized the fees charged by Apple for facilitating via the App Store the initial acquisition of a new customer by developers, saying they went beyond what was strictly necessary for such remuneration.
External Purchase Link Entitlement
Another key change is the introduction of the External Purchase Link Entitlement, which allows developers to use actionable links to direct users to their destination, use any number of URLs, and provide links with parameters, redirects, and intermediate links to landing pages. This change aims to give developers more flexibility in how they communicate and promote offers within their apps. Apple stated, "Updated business terms for apps with the External Purchase Link Entitlement are being introduced to align with the changes to these capabilities".
Impact on Developers and Users
These changes are expected to have a significant impact on both developers and users:
For Developers
The ability to communicate and promote offers outside the App Store provides developers with more freedom to market their products and potentially reduce their dependency on Apple's platform. This could lead to increased competition and innovation within the app ecosystem. Developers will now have the opportunity to offer better deals and promotions directly to their users without being constrained by Apple's policies.
For Users
Users will benefit from greater transparency and more purchasing options. They will be able to access better deals and offers that were previously restricted by Apple's policies. This change aligns with the DMA's goal of creating a fair and open marketplace. By allowing developers to communicate and promote offers outside the App Store, users will have more choices and potentially save money on their purchases.
Reactions and Future Implications
The changes have been met with mixed reactions. Some developers have welcomed the new policies, seeing them as a step towards a more competitive and fair marketplace. However, others are concerned about the new fee structure and its potential impact on their revenue. The introduction of the 5% acquisition fee and the 10% store services fee may offset some of the benefits gained from the ability to promote offers outside the App Store.
Margrethe Vestager commented on the changes, stating, "The DMA is not an excessive ask. [It] is plain vanilla to ask for a fair, open and contestable marketplace". This sentiment reflects the Commission's commitment to enforcing the DMA and ensuring that big tech companies like Apple adhere to its regulations.
The changes to Apple's App Store policies are likely to set a precedent for other tech giants operating in the EU. Companies like Google, Amazon, Meta, Microsoft, and TikTok owner ByteDance are also under the Commission's lens and may face similar scrutiny and regulatory actions. The DMA's enforcement is expected to bring about significant changes in how these companies operate and interact with developers and users.
Apple's decision to change its App Store policies in the EU marks a significant shift in how the company operates within the region. These changes are a direct response to the European Commission's probe and the requirements of the Digital Markets Act. While the long-term impact of these changes remains to be seen, they represent a move towards greater transparency and competition in the app marketplace.
The new policies will provide developers with more freedom to communicate and promote offers outside the App Store, potentially leading to increased competition and innovation. Users will benefit from greater transparency and more purchasing options, aligning with the DMA's goal of creating a fair and open marketplace. As the DMA continues to be enforced, other tech giants may also face similar scrutiny and regulatory actions, further shaping the digital landscape in the EU.
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