- Apple admits it will have to make business changes owing to the EU’s DMA rules.
- This may affect communications related to alternative purchasing mechanisms and the distribution of apps outside of the App Store.
- Analysts expect Apple will initially allow 3rd party App Stores in Europe.
After implementing USB-C ports on iPhones due to the regulatory pressures from the EU, Apple may now allow third-party app stores or app installations on its devices like iPhones. This time it would be pressed to do this because of the EU’s Digital Markets Act. Let’s see what that act states and what changes Apple “expects to make” to its app store policies as a result of it.
How EU’s Digital Markets Act affects Apple
On September 6th, the EU designated 6 big tech companies as the gatekeepers for they “provide an important gateway between businesses and consumers in relation to core platform services”. Apple is one of these gatekeepers as its App Store acts as this gateway between consumers and other businesses (app developers and publishers).
EU had given a series of do’s and don’ts to Apple and other gatekeepers and these companies were given 6 months to comply. This means Apple has to:
- Allow 3rd party apps and app stores to operate with it on its devices in “certain conditions”.
- Allow these parties to access data they generate while operating on Apple’s platforms like its app stores and OS.
- Allow app developers to conduct payment and other transactions outside the confines of Apple Walled Garden.
It can’t stop users from uninstalling the preinstalled apps on their Apple devices. It won’t be allowed to prioritize its own services over competing alternatives. As a stalwart of privacy, EU wants Apple to not track end users outside its platforms for targeted advertising.
If Apple or any of the gatekeepers fail to comply then, the EU will fine them up to 10 percent of the company’s total worldwide annual turnover, or up to 20 percent if the brands repeatedly break the rules. Not only that, they have to also pay up to 5 percent of the average daily turnover as a periodic penalty.
The deadline date for Apple and others to comply is March 7th, 2024.
Signs of Apple complying to EU’s DMA
In its annual 10K filing report to the US Securities and Exchange Commission, Apple has made some changes to its usual wording with respect to risk factors in the fiscal year 2023. It says it “expects to make further business changes in the future including as a result of legislative initiatives impacting the App Store, such as the EU Digital Markets Act, which the Company is required to comply with by March 2024″.
Apple portends these changes may adversely affect its revenue and overall business.
Meanwhile, as per Techcrunch, Morgan Stanley analysts think Apple is well positioned to handle this thanks to the “App Store’s security, centralization, and convenience,” and that the company will “likely begin 3rd party app stores on device in Europe.”
