Even if it is met with protest, the American tech giant Apple is loosening its iron grip on the iPhone. The App Store will soon no longer be the only place where you can download new software. Apple also loses its exclusive right to contactless payment at the store checkout. Until now, iPhone users can only use Apple Pay, but from March 7 there will be more options.
The reason for these adjustments is the new European law that tries to limit the power of large tech companies. This Digital Markets Act (DMA) applies from March 7. Apple appealed against the law, but announced on Thursday that the iPhone will be changed in the EU.
Since the beginning of the App Store in 2008, Apple has determined the rules and rates in its own download store. It has now become a powerful means of distribution: in 2022, the App Store would have sold $1,100 billion, of which more than $200 billion was spent on advertising and digital goods and services.
As a store manager, Apple charges a 15 to 30 percent commission for the paid apps and services sold there. That adds up: revenue from ‘services’, which includes the App Store, amounted to $22.3 billion in the last reported quarter. That’s about a quarter of Apple’s total quarterly revenue.
Monopoly position
Although Apple denies that it abuses its monopoly position on the iPhone, objections about this have mounted. In the Netherlands, the Netherlands Authority for Consumers and Markets ruled two years ago that the terms and conditions of the App Store are ‘unreasonable’ because all payment transactions go through Apple.
The EU also accuses Apple of abuse of power in the App Store, encouraged by music service Spotify and game maker Epic (of the popular game Fortnite). Epic is involved in a lawsuit with Apple in the US because it was not allowed to install its own download store on iPhones. Fortnite disappeared from the iPhone, but can now make a comeback in the EU.
Epic boss Tim Sweeney was disappointed in the adjustments that Apple announced. In a message on X he called them “evil” and a “new horror show”, because Apple still imposes all kinds of demands on competing software stores.
The adjustments are in the new version of the iOS operating system, 17.4. Apple reluctantly bows out. “Despite the limitations of the DMA, we still try to protect European users as best as possible and keep them safe,” Apple writes in a statement. explanation.
Installing software outside the official download store is risky, Apple says, because the company cannot check every app itself for malicious code or privacy violations.
There are strict rules in the App Store for apps that Apple says are unacceptable. The iPhone maker will soon have to watch how alternative download stores will apply their own standards and will be less strict with, for example porn apps
Even though Apple loses control over the content, it does enforce that every app is checked for malicious software. To prevent fraudsters, alternative download stores must prove their financial health to Apple every year. The requirement: at least one million euros in cash, with a stamp from the bank.
The commission for Apple will be reduced to 10 to 17 percent. Developers who pay via Apple’s payment system pay an extra 3 percent. But popular apps distributed through an alternative download store must pay Apple 50 cents each time the program is installed. Such obstacles make it less attractive for software makers to work outside the App Store. The tariff system is so complicated that Apple only has a calculator for it designed has.
The changes to the phone go beyond the downloads. The EU is forcing Apple to release its payment chip, made by the Dutch NXP, for competing apps besides Apple Pay. In September last year, Apple CEO Tim Cook resigned NRC that he thought the contactless bank card was sufficient competition. “The payments market is a very competitive environment,” said Cook.
Alternative web browsers are no longer required to use Apple’s underlying technology. That means the standard Safari browser will face more competition.
Only in the EU
By 2023, Apple was the world’s largest supplier of smartphones, selling more iPhones than phones from Samsung or its Chinese competition. The iPhone also turned out to be the best-selling device in China.
There are approximately one and a half billion iPhone users worldwide. The European Union has a large population there 100 million – just under one in four residents. In the Netherlands, just like in Sweden, more than half of smartphone users opted for an iPhone.
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Outside the EU, Apple’s rules will remain as strict as before for the time being: as long as there is no legal coercion, the company will not relax the rules of its own accord. But the US, South Korea, Japan and the United Kingdom are also making efforts to tackle the abuse of power surrounding the iPhone. It doesn’t stop with this one knee drop.