Apple retreats in battle to defend European App Store

Apple Inc on Tuesday made a major concession in its fight to protect its App Store’s dominance of iPhones and other devices in Europe, saying developers would be free to distribute their apps directly to consumers.

Apple announced the changes to comply with the European Union’s Digital Markets Act (DMA), which came into effect last week. The changes could erode the high profit margins and steady revenue stream Apple relies on from the App Store, where it charges developers fees of up to 30%.

The changes only affect the European Union, and rivals have repeatedly criticized Apple’s compliance efforts as insufficient.

Starting this spring, software developers operating in Europe will be able to distribute apps to EU customers directly from their own websites rather than through the App Store.

Susannah Streeter, head of money and markets, said: “While the App Store isn’t free to extract, it could still be a sizable cash cow for a while because Apple’s peaceful offering comes with strings attached. ‘s.” At Hargreaves Landing.

Developers must still meet the terms and conditions set by Apple and become authorized developers. Apple has also introduced a “core technology fee” of 50 euro cents per user account per year, even if developers choose not to use Apple’s App Store or payment system.

The DMA aims to curb Apple, Amazon, TikTok owner ByteDance, Meta Platforms, Alphabet’s Google and Microsoft, creating a level playing field for smaller rivals and ultimately creating more competition for Europeans.

“To reflect changes to the DMA, EU users can install apps from the Alternative App Market in iOS 17.4 and later,” Apple said on its website. “Users will be able to download Alternative Market apps from the marketplace developer’s website.” iOS Yes Refers to the software platform that runs Apple’s iPhone and iPad.

Apple has long viewed its ecosystem as a highly profitable “walled garden,” and its opening in Europe comes at a sensitive time for the tech giant.

The iPhone maker is facing shrinking revenue and weak smartphone demand in China. In January, Microsoft overtook Apple as the world’s most valuable company, with investors betting that Apple is lagging behind big tech rivals in the race for dominance in artificial intelligence technology.

Apple shares rose 0.6% on Tuesday afternoon, paring 2024 losses to 10%.

The changes announced Tuesday include allowing developers to set up alternative app marketplaces that offer catalogs consisting only of the developers’ own apps, effective immediately.

Rather than using Apple’s templates, developers can choose how to design in-app promotions, discounts and other deals when guiding users through transactions on their sites.

Under pressure from regulators and the DMA, Apple backed down in its dispute with Epic Games last week, allowing it to launch its own games store on iPhone and iPad in Europe. Companies that breach the DMA’s regulations could face fines of up to 10% of their global turnover.

Apple also said it would appeal a 1.84 billion euro ($2.01 billion) antitrust fine imposed by the European Union last week for hampering competition from Spotify and other music streaming rivals by restricting the App Store.

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