By Emily Bary
Apple is planning to allow other app stores in response to forthcoming EU rules meant to help developers, who have chafed at App Store model
Apple Inc. has long operated as a walled garden, but the company is now expected to grow more open as governments around the world seek changes to its business.
Bloomberg News reported Tuesday afternoon that Apple (AAPL) was planning to allow multiple app stores on its phones and tablets in Europe, which would mark a major change for a company that has built its proprietary App Store into a monster business.
Apple has maintained that its current App Store model offers security benefits to users as the company sets standards for apps and vets updates. But the App Store has been a lightning rod for several high-profile developers that have chafed at the cut Apple takes of digital purchases made through third-party apps on its devices. Even Elon Musk, the new owner of Twitter, has joined that chorus.
Apple takes a 30% cut of purchases of digital services made in third-party iOS apps, though that cut goes down to 15% after the first year. Amid a push by developers, including a yearslong landmark antitrust trial launched by “Fortnite” maker Epic Games Inc. — which wants to offer its own app store for Apple’s iOS as well as Alphabet Inc.’s (GOOGL) GOOG Android operating system — Apple has made some changes to that system, but none as dramatic as what was reported Tuesday.
The reported change, however, wouldn’t be driven by a desire to appease developers out of benevolence. Rather, it seems aimed at compliance with forthcoming European Union regulations that seek to protect developers from those hefty commission fees.
See more: Landmark EU law could take billions from Apple, and already forced a major change at Google
The Digital Markets Act, or DMA, will start taking effect next year. After its passage, industry experts expected that it would prompt Big Tech to allow alternative app stores or alternative ways to pay for in-app purchases on its devices, and changes have already been made — Google, which owns Android’s app store called Google Play, struck a deal with Spotify Technology SA (SPOT) earlier year allowing for a different type of payment method within the music-sharing app.
The Bloomberg story noted that Apple has yet to decide whether it would opt to comply with a part of the Digital Markets App allowing developers to place their own payment systems within apps so that Apple wouldn’t necessarily be involved in the purchase of subscriptions or other digital items through those apps. Apple has already been forced to allow app developers to push consumers toward payment options outside of the app that would avoid the fee — Twitter, for instance, plans to charge more for Twitter Blue subscriptions made within its iOS app than subscriptions made on the web.
In-depth: Apple has spent decades building its walled garden. It may be starting to crack
South Korea has passed a law requiring alternate payment options in mobile apps, and there are bills in the U.S. Congress focused on similar requirements. The Open App Markets Act, a bill co-sponsored by Sens. Richard Blumenthal, D-Conn., and Marsha Blackburn, R-Tenn., would require competing payment options to be allowed, while the American Innovation and Choice Online Act, a bill co-sponsored by Sens. Amy Klobuchar, D-Minn., Chuck Grassley, R-Iowa, and Lindsey Graham, R-S.C., is designed to protect the ability to sideload apps and prevent operators of app marketplaces like Apple from “self-preferencing” their own products.
For more: U.S. scrambles to catch up with European push to rein in Big Tech
Bloomberg reported that Apple is making a big push around the effort with its engineers and other employees, though it isn’t necessarily popular given the company’s longstanding focus on its own App Store. The report also notes that Apple still intends to charge some kind of fees for apps that use iOS, even if they don’t go through the official App Store. The company didn’t immediately respond to MarketWatch’s request for comment on whether it was considering changing its approach to app downloads.
The report also mentioned that Apple was considering imposing security requirements even for apps not downloaded through its own store. The goal is for the changes to come out with iOS 17, the next iteration of Apple’s mobile operating system, according to the report. Apple typically previews each new software update toward the middle of the year, with a rollout around the time of the fall iPhone launch.
See also: Epic v. Apple could be a legal marathon as appeals wend through system
-Emily Bary
(END) Dow Jones Newswires
12-14-22 0757ET
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