Apple to permit downloads outside App Store in EU, introduces ‘core technology fee’

Apple has announced its intention to enable software developers to distribute their applications to users in the EU outside of Apple’s App Store. This decision comes as a response to the Digital Markets Act (DMA), which imposes certain requirements on companies with a large user base and significant market capitalization. Under the DMA, these companies must ensure compatibility with rival apps and allow users to choose which apps they want to pre-install on their devices.

Developers will have the option to provide alternative app stores on iPhones and bypass Apple’s in-app payment system, which imposes commissions of up to 30%. Nevertheless, developers are still required to submit their apps to Apple for review to mitigate cybersecurity risks and detect obvious fraudulent activities. Additionally, Apple will levy a “core technology fee” of 50 euro cents per user account per year on major app developers, irrespective of their utilization of Apple’s payment services. While Apple has stated that the fee will only be imposed on major developers, but the exact number of users that will trigger the fee has not been specified. The company has announced that the first 1 million user accounts will be exempt from the fee, and it will not apply to nonprofits, schools, or governments.

According to companies like Epic and Spotify, Apple’s fees and limitations have hindered their businesses for a long time. In response, Apple’s App Store approach has evolved into a complex set of rules in recent years as the company addresses legal and regulatory challenges. For instance, earlier this month, Apple said it will change rules for linking to third-party websites for payment in the United States, following a ruling in an antitrust suit by Epic. However, it will still charge a 27% commission on link-outs, resulting in limited economic benefits for developers.

Different rules for App Store in Europe

In contrast to the US rules, as stated earlier, Apple will allow developers in the EU to have the option to integrate a third-party payment processor within their App Store applications free of cost. It will further allow EU iPhone users to choose their default web browser and contactless payments app, enabling them to make contactless payments without relying solely on the Apple Pay system.