Apple is reportedly preparing to allow third-party app stores space on iPhones and iPads in the European Union to comply with its incoming competition laws, according to a report.
The sweeping change to the App Store rules are Apple’s response to the EU’s Digital Markets Act (DMA), Bloomberg’s Mark Gurman reported Tuesday. The DMA targets ‘gatekeepers’ such as Amazon, Apple, Google, Microsoft, Meta and others. The act came into force on November 1 but gives those gatekeepers until March 2024 to comply.
Europe is Apple’s second largest market and accounted for $22.7 billion of its $90.1 billion in sales for its fiscal 2022 Q4. However, Bloomberg Intelligence estimates the App Store accounts for 6% of Apple’s total revenues.
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Allowing third-party app stores on to iOS devices would potentially allow customers to side-load apps and bypass Apple’s rules, its payment system and its 15% to 30% commission on payments.
According to Bloomberg sources, Apple software engineering and services employees are in a major push to open key elements of Apple’s platforms. It notes the project could be the foundation of its system for other regions if similar laws are passed in other markets.
For example, the Australian Competition Commission last month published the latest update to its five-year Digital Platform Services inquiry, which looks at imposing new anti-competition rules on app stores, and is studying the DMA.
The DMA bans gatekeepers from imposing unfair access conditions on their app store or preventing users from installing apps from other sources. It also aims to make it easier for users to change a device’s default settings and allow users to uninstall pre-loaded programs. Potential gatekeepers have until 3 July 2023 to notify the European Commission if they meet DMA thresholds.
The DMA applies to tech firms that had an annual turnover of at least €7.5 billion in the EU during the past three years or have a market valuation of €75 billion and up. They also must have at least 45 million monthly end users and at least 10,000 business users in the EU.
Bloomberg reports Apple’s DMA efforts are being led by software engineering vice president Andreas Wendker, who reports to Apple’s top software exec, Craig Federighi. Also involved is Jeff Robin, who leads Apple services engineering.
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The effort is likely as unpopular within Apple as Europe’s requirement for all companies to support USB-C from October 2024. Apple execs argued last month that it “would have been better environmentally and better for our customers to not have a government be so prescriptive.”
For the past few years, Apple has argued that the only reason there’s little malware on iOS is because of its walled garden approach to app installation and distribution. Google discourages but allows side-loading on Android. Federighi told a European conference last year that with side-loading on iOS, the “floodgates are open for malware”.
According to Bloomberg, Apple is considering mandating certain security requirements for apps distributed outside its store, including verification by Apple for a fee. Apple is also considering allowing browsers such as Chrome to use browser engines other than only Apple’s WebKit, as well as opening up third-party app access to the iPhone’s NFC chip, which is currently limited to Apple Wallet and Apple Pay.
