Apple has responded to the EU’s Digital Markets Act (DMA) by announcing significant changes to its iOS operating system, including the introduction of a “Core Technology Fee” and modifications to business terms. The company aims to comply with the DMA’s requirements while maintaining its ecosystem’s integrity. Developers in the European Union will experience new options for app distribution, alternative browser engines, and interoperability requests. Apple’s business terms include reduced App Store fees and a payment processing fee. However, concerns arise over compliance with the DMA, and Epic Games criticizes the changes as “malicious compliance” with “junk fees.”
Apple has unveiled a series of significant changes to its iOS operating system for users in the European Union (EU) in response to the Digital Markets Act (DMA). The DMA designates Apple as one of the gatekeepers and imposes various obligations and restrictions on the company, including the acceptance of sideloading of apps. The compliance deadline for gatekeepers, including Apple, is March 7.
Apple Introduces Core Tech Fee and Business Changes in EU
As part of the changes, Apple has introduced iOS 17.4 in beta, allowing developers to prepare for the upcoming modifications that will align with the EU’s requirements. The alterations include options for distributing iOS apps through alternative app marketplaces, with new APIs and tools facilitating developers in offering their apps for download from such platforms. Additionally, a framework and APIs for creating alternative app marketplaces have been introduced, allowing marketplace developers to install apps and manage updates on behalf of other developers.
Furthermore, Apple has provided frameworks and APIs for alternative browser engines, enabling developers to use browser engines other than WebKit for browser apps and in-app browsing experiences. To facilitate interoperability, a request form has been introduced where developers can submit additional requests related to iPhone and iOS hardware and software features.
In an effort to settle an antitrust proceeding against Apple Pay, the company has proposed changes to contactless payments on iOS, asserting that these changes are DMA-compliant. They include new APIs enabling developers to use NFC technology in banking and wallet apps throughout the European Economic Area (EEA), and controls that allow users to select a third-party contactless payment app or an alternative app marketplace as their default.
However, the European Commission will evaluate whether Apple’s proposed changes comply with the DMA. Non-compliance could result in fines of up to 10% of global annual turnover and require Apple to reconsider its approach.
In parallel with these DMA-focused modifications, Apple is introducing new business terms in Europe, featuring a “Core Technology Fee.” This fee aims to ensure that Apple can still receive a cut in certain scenarios when developers choose to distribute their apps via alternative app stores or encourage users to make payments for additional content outside Apple’s ecosystem.
Under the new business terms, iOS apps distributed from the App Store or alternative app marketplaces will incur a fee of €0.50 for each first annual install per year over a 1 million threshold. Developers must accept these terms to access the new capabilities, such as distributing apps via alternative app stores. Apple argues that the fee structure reflects the value it provides to developers’ businesses, considering distribution and discovery on the App Store, secure payment processing, the trusted mobile platform, and the technology for building and sharing innovative apps.
Additionally, Apple is adjusting the cut it takes from digital purchases on iOS apps in its App Store. The new rates are either 17% on transactions for digital goods and services or 10% for the majority of developers and subscriptions after the first year. A 3% payment processing fee will be levied for iOS apps on the App Store using Apple’s payment tech, but developers can opt for alternative payment service providers without an additional fee.
Apple estimates that more than 99% of developers will experience reduced or maintained fees under the new business terms. The Core Technology Fee is expected to apply to less than 1% of developers with exceptionally popular apps.
The introduction of the Core Technology Fee and adjustments to business terms raise questions about their compliance with the DMA. The regulation emphasizes fair, reasonable, and non-discriminatory conditions of access for business users. Apple will need to demonstrate that its business terms meet these criteria to avoid potential regulatory issues.
As part of the changes, Apple is implementing various features on its platform, such as notarization for iOS apps, app installation sheets, authorization for marketplace developers, and additional malware protections. These features, including the introduction of the Core Technology Fee, may be presented as justifications for the value provided by Apple’s technology platform and services.
During a briefing with journalists, Apple representatives highlighted potential security risks associated with the DMA-required changes, particularly concerning the ability of iOS apps to install other apps on users’ devices. Apple refers to these alternative app stores as “marketplace apps” and suggests they could become common attack vectors for malware. Apple claims that, to date, there has been no widespread consumer malware attack on iOS.
While developers accepting Apple’s new business terms can build alternative app stores, they still need to undergo an app review process by Apple to ensure user and developer protection. The changes also include a choice screen for iOS users to select their default browser, new App Store product page labels, in-app disclosure sheets, and expanded data portability on Apple’s Data & Privacy site for EU users.
As Apple navigates the requirements of the EU’s Digital Markets Act (DMA), its proposed changes to iOS, business terms, and the introduction of the “Core Technology Fee” raise questions about compliance and potential implications for developers. The company emphasizes the value it provides to developers through its ecosystem, but criticisms from Epic Games underscore ongoing tensions within the industry. With the March 7 compliance deadline looming, Apple’s restructuring and the EU’s evaluation will shape the landscape for app distribution and payments in the European market. The outcome will likely impact not only Apple’s relationship with developers but also the broader app ecosystem in the EU.
