Apple Inc. has announced a historic overhaul of its iOS, Safari and App Store offerings in the European Union, in response to the new antitrust regulations imposed by the bloc. The changes will give customers and developers more choices and flexibility, but also pose new risks and challenges for the company and its users.
One of the most significant changes is that customers will be able to download software from outside the App Store for the first time, the company said Thursday. They’ll also be able to use alternative payment systems and more easily choose a new default web browser — addressing two frequent complaints of developers and lawmakers.
The revamp is a direct response to the EU’s new Digital Markets Act, which imposes rigid restrictions on the largest tech firms and boosts the EU commission’s powers as the region’s antitrust enforcer. The law aims to prevent unfair practices and promote competition and innovation in the digital sector.
Apple has been facing scrutiny and criticism from regulators, lawmakers, and developers over its App Store policies and practices, which they claim are monopolistic, restrictive, and unfair. The company has been accused of abusing its dominant position, charging excessive fees, favoring its own apps and services, and stifling innovation and competition.
Apple has defended its App Store as a safe, secure, and trusted platform that benefits both customers and developers. The company has argued that its fees are reasonable and comparable to other platforms, and that its rules and guidelines are necessary to protect users from malware, fraud, and scams.
However, the company has also made some concessions and adjustments to its App Store policies in recent months, such as reducing its commission rate from 30% to 15% for small developers, allowing developers to communicate with customers about alternative payment methods, and settling a class-action lawsuit with US developers for $100 million.
Apple introduces new capabilities and safeguards for alternative browser engines and contactless payments
Another major change is that developers will be able to create tap-to-pay apps using the iPhone’s payment chip, as well as browsers with third-party engines and extensive game streaming services. These features were previously exclusive to Apple’s own apps and services, such as Apple Pay, Safari, and Apple Arcade.
Apple said that these changes will enable developers to offer more diverse and innovative experiences for users, while maintaining the high standards of quality and performance that customers expect from Apple products.
However, Apple also cautioned that these changes do threaten to undercut the company’s long-held emphasis on user security and privacy. The company said that it is having to create technology to allow an app to install other apps, and inherent in that is risk. That could be a big threat vector for the privacy, security and integrity of the device, the company said.
To mitigate these risks, Apple is introducing new safeguards that reduce — but don’t eliminate — the potential harm that the DMA’s changes bring. These include Notarization for iOS apps, an authorization for marketplace developers, and disclosures on alternative payments. Apple said that it will not extend its content-related guidelines to a third-party marketplace.
Apple also warned that in a big year for elections worldwide — with the associated threats of malware and malicious technologies circulating — there may be new risks for users from downloading apps from alternative app marketplaces that don’t share Apple’s security standards.
Apple challenges the EU’s Digital Markets Act in court
The changes for EU apps reflect the European Commission’s designation of iOS, Safari, and the App Store as “core platform services” under the Digital Markets Act. The law applies to companies that have more than 45 million monthly active users in the EU and provide services that are essential for other businesses to operate.
The law prohibits these companies from engaging in certain practices, such as self-preferencing, tying, blocking, or degrading access to their services, or imposing unfair terms and conditions on their users and business partners. The law also imposes obligations on these companies, such as allowing interoperability, data portability, and access to their platforms by third parties.
The law also gives the EU commission the power to impose fines of up to 10% of the company’s annual revenue, order structural remedies, and impose interim measures in case of urgent threats to competition. The law also allows national authorities and courts to enforce the law and impose sanctions.
Apple has been vocal in its opposition to the law, saying that it is harmful for innovation, competition, and consumer choice. The company has argued that the law is based on a flawed understanding of the digital market and that it will create a fragmented and inconsistent regulatory environment in the EU.
Apple has also challenged the legality and validity of the law through the EU courts, claiming that it violates the principles of proportionality, subsidiarity, and legal certainty. The company has asked the court to annul the law or suspend its application until the case is resolved.
The company said that it respects the EU’s authority and role as a regulator, but that it believes that the law is unjustified, disproportionate, and discriminatory. The company said that it will continue to argue to the courts and regulators that Apple is not breaking the law and that its products and services are fair, competitive, and beneficial for customers and developers.
Apple prepares for the launch of iOS 17.4 in March
The announcement is a big moment for both Apple and the EU. The closed design of the App Store was a founding principle of the technology — aimed at ensuring security, safeguarding the user experience and boosting revenue. For the EU, Apple’s changes are the biggest test yet of whether it can force meaningful reforms in how the world’s largest tech companies operate.
The announcement jarred investors, who sent the shares negative after earlier gains. As of 2:08 p.m. in New York, the stock was down less than 1% at $193.83.
The new capabilities will become available to users in the 27 EU countries beginning in March 2024, as part of Apple’s iOS 17.4 operating system. Developers can learn about these changes on the Apple Developer Support page and can begin testing new capabilities today in the iOS 17.4 beta.
Apple said that it will share new resources to help EU users understand the changes they can expect. That includes guidance to help EU users navigate complexities the DMA’s changes bring — including a less intuitive user experience — and best practices for approaching new risks associated with downloading apps and processing payments outside of the App Store.
