In a landmark shift for digital markets within the European Union, Apple is poised to introduce a revamped App Store framework, marking a significant departure from its longstanding app distribution model. Prompted by the EU, this overhaul aims to dismantle the App Store’s dominance by enabling iPhone users1 to explore and download apps from alternative platforms for the first time since the iPhone’s inception in 2008. This groundbreaking change not only broadens the horizon for app discovery and installation but also introduces new payment processing avenues, potentially reshaping the digital ecosystem for millions of users across Europe.
Installing software the Apple way
Installing software on Apple devices has always been a distinct experience, marked by the integration and security2 that the App Store provides. Unlike the more open ecosystems of Windows and Linux, where users can download applications from virtually any source, Apple’s approach (at least since the introduction of iOS) has traditionally restricted app installation to its App Store. This walled garden philosophy extends to macOS as well, although it does offer slightly more flexibility compared to iOS, allowing users to install software from identified developers outside the App Store3, provided the user bypasses the Gatekeeper security feature.
This controlled environment contrasts sharply with the Windows experience, where users have the freedom to install software from a myriad of sources, although this freedom comes with an increased risk of malware and security threats. Linux, on the other hand, epitomizes openness, with its package manager systems and the ability to compile software from source code, offering unparalleled control and customization to its users.
However, Apple’s tightly controlled App Store ecosystem has its drawbacks. Critics argue that it severely limits user choice, confining them to apps that adhere to Apple’s stringent guidelines. This limitation impacts the diversity of available apps and stifles innovation by restricting developers who might wish to offer apps that fall outside Apple’s approval parameters. Moreover, the App Store’s high commission fees—up to 30% on purchases and in-app transactions—have been a point of contention, with developers and critics alike arguing that these fees are exorbitant and constitute an unfair tax on the digital economy. These fees can also inflate the cost of apps and digital goods for consumers, making digital products pricier on Apple’s platform than elsewhere.
What is going to change (in the EU)
Under the new EU legislation, Apple is set to introduce a transformative approach to app distribution within the European Union, allowing for the advent of third-party app stores on iOS devices for the first time. This significant update, a part of the iOS 17.4 release, is Apple’s response to the Digital Markets Act’s stipulations, aiming to diversify the app ecosystem and enhance user autonomy in app selection and installation. This change enables developers to distribute their iOS applications through alternative marketplaces, potentially broadening the app landscape for users by including apps that might not have been available on the App Store due to Apple’s stringent guidelines.
The process involves a system of notarization, where each app, irrespective of its distribution platform, undergoes a review for security and compliance, ensuring that the fundamental standards of safety, privacy, and functionality are upheld. Developers interested in leveraging these alternative marketplaces will need to navigate through Apple’s authorization process for alternative distribution. This system aims to maintain the integrity and security of the iOS ecosystem while complying with the EU’s mandates to foster competition and reduce the monopolistic grip on app distribution. Further, Apple requires a fee to be paid to them for applications using the new alternative app marketplaces.
What is the difference between actual and malicious compliance?
Apple’s recent maneuvers in response to the European Union’s Digital Markets Act offer a fascinating case study. The distinction between genuine compliance and what some critics dub “malicious compliance”4 is at the heart of this debate. True compliance aims to embrace the spirit of regulation, fostering an environment that aligns with its intended goals. Conversely, malicious compliance adheres to the letter of the law while ingeniously skirting its spirit, often resulting in minimal adherence that technically meets legal requirements but fails to embody the regulation’s core objectives.
Apple’s introduction of third-party app stores in the EU, a move forced by the EU’s regulations, has sparked a strong debate. Is Apple genuinely embracing the spirit of these new rules, aimed at fostering competition and choice (hint: I don’t think so), or is it cleverly maneuvering to maintain its lucrative revenue streams under the guise of compliance?
Critics, including prominent figures and entities within the tech ecosystem, argue that Apple’s implementation, complete with new fees and a notarization process for third-party apps, may be an artful dodge. For example, Epic Games CEO Tim Sweeney labeled Apple’s approach as “malicious compliance,” suggesting that the new structure could compel developers to choose between the exclusivity of the App Store or navigate a potentially prohibitive alternative system. Spotify, too, has voiced its dissatisfaction, calling Apple’s efforts a “farce” and critiquing the new fee structures as merely a different shade of the existing “Apple tax”.
This situation raises pivotal questions about the balance between regulatory compliance and the preservation of business models, especially in the rapidly evolving tech landscape. Are Apple’s actions a strategic ploy to deter developers from seeking alternatives to the App Store, thus ensuring its continued dominance and revenue flow? Or is it a legitimate attempt to comply with the EU’s regulations while safeguarding its ecosystem’s integrity and user experience?
I would argue that this is minimal compliance, and there is a point to be made: the European Union will probably try to force (hopefully successfully) Apple’s hand a bit more. In my opinion, specifically, the fee is not really a doable thing, as the cost can and will be prohibitively high for some developers. TechLinked summarized it quite well:
Who is profiting from this?
From the standpoint of application developers, it does make sense for all those, who primarily have a paid product that they want to distribute outside the app store. This new rule allows them to do this in a more cost-effective manner and might also help them with delayed updates. If you are offering a free app, you are also out of luck if you cannot follow the App Store’s rules, as the cost of a free app will skyrocket, if you are above the free tier (it appears to be hard to be able to raise the 50 cents if one is considering that the apps are free).
And of course, this only applies to people in the European Union. If you are outside the European Union, you are still out of luck.
Is this story done?
With this change, Apple appears to be aligning itself strictly with the letter of the law, perhaps at the expense of its underlying intent aimed at fostering greater competition and consumer choice. This approach raises questions about the potential response from the EU, which has historically not shied away from taking stringent measures to ensure compliance in spirit, not just in form. The EU’s reaction could range from further regulatory scrutiny to mandates for more substantive changes, should they perceive Apple’s current adjustments as insufficiently embracing the Act’s goals. In the interest of better consumer products, I would personally welcome this.
Looking ahead, one wonders if Apple might ultimately benefit more from competing on the merits of its product offerings rather than the confines of its carefully curated ecosystem. Embracing a more open ecosystem could potentially spur further innovation, enhance consumer choice, and reinforce Apple’s competitive position in the global market. Leading to a better situation for the consumers as well as for the company.
Yes, Apple indeed argues that the iPad’s and the iPhone’s operating system is not the same. ↩︎
This blog post will take Apple’s claims about security in their app stores at face value, even though this might be quite questionable as well. ↩︎
Homebrew is an absolutely awesome tool to install software from outside the app store, and everyone should use it, in my opinion. ↩︎
It’s me, hi, I’m the critics, it’s me. (As well as some more knowledageble people.) ↩︎