Apple is preparing to allow its iPhone and iPad users to use a third-party app store instead of the App Store. This is part of an overhaul to comply with strict new European Union regulations. The EU is also reportedly demanding that Apple give developers more rights. This includes allowing developers to include third-party payment systems in their APPs to replace Apple Pay, but Apple has not made a final decision on whether it will comply.
Apple is also in the process of opening up more private application programming interfaces (APIs) and features to third-party apps, including more camera technology, NFC, iMessage and its messaging app, Find My Network and more. While this change is currently limited to the European Union, Apple could make changes in additional markets if more countries pass similar laws in the future.
The staff of Apple’s Software Development and Services division is making a big push to open up Apple’s platforms. Under the reform, users will finally be able to download third-party software directly to iPhones and iPads without using the Apple App Store, bypassing Apple’s restrictions and payment commissions of up to 30%. For a long time, Apple has restricted its users to downloading and purchasing apps and services only through the Apple App Store. This has also led to complaints from many regulators and software vendors who believe Apple has a monopoly.
The EU’s latest Digital Markets Act will come into force in the coming months and will require companies to comply with all of its provisions from 2024. The law aims to improve the playing field for third-party developers and make consumers’ digital lives easier. The law applies to tech companies with a market valuation of more than $80 billion and at least 45 million monthly users in the EU. Under the requirements of the law, technology companies must allow users to install third-party applications and require that mobile messaging services be interoperable and that external developers have equal access to the key application and service features.
Government officials in the United States and other countries are now pushing for similar legislation, though not to the same extent as in the European Union. While the reform is currently only in effect in Europe, people familiar with the matter said Apple’s current reform project could lay the groundwork for other regions if similar legislation is passed in other countries.
Apple has vehemently opposed the new EU law, repeatedly arguing in its lobbying efforts that sideloading could put insecure apps on consumers’ devices and jeopardize privacy. Some engineers involved in the program also felt it would distract them from the day-to-day development of future features.
In terms of hardware, Apple also plans to use a USB-C connector instead of the Lightning connector in the next generation of iPhones in 2023, again to comply with EU regulations.
The EU has previously threatened to fine a company up to 20% of its annual global revenue if it repeatedly violates the law. Apple’s global revenue in fiscal 2022 is nearly $400 billion. Based on this calculation, the European Union will impose a fine of up to $80 billion – such a large penalty could be the main reason Apple agreed to a compromise. Overall, however, Apple should still be able to cope with the financial consequences, analysts said. According to Bloomberg Intelligence analysts Anurag Rana and Andrew Girard, the App Store accounts for 6 percent of Apple’s total revenue, while the European market could contribute less than 2 percent.
