Apple Inc. is set to introduce new measures and limitations to comply with a recently introduced European law. As reported by the Wall Street Journal, the tech company plans to open its ecosystem to third-party software downloads outside of its renowned App Store, but only within the European region. This significant step by Apple will enable consumers in Europe to directly download software onto their iPhones for the first time, eliminating the need to go through the App Store.
The Drive for Change
Apple has been facing numerous regulatory and legal challenges from software makers globally who are highlighting concerns over its control of third-party software. In response to this, other major platforms such as Facebook’s Meta Platforms Inc. and Spotify Inc. are also preparing corresponding updates to comply with the new regulations. Meta is considering the inclusion of direct app downloads from advertisements, while Spotify plans to allow users to download select iPhone apps directly from its own website. Additionally, Microsoft Corp. has previously discussed the possibility of launching its own third-party app store specifically for games.
Addressing Security Concerns
In defense of its App Store, Apple has consistently emphasized how it ensures the security of iPhones from potential viruses. However, critics argue that Apple’s control over third-party software is anticompetitive.
To abide by the new EU law, Apple will maintain strict oversight of apps downloaded externally to the App Store. This process, commonly referred to as sideloading, will allow Apple to secure its ecosystem while accommodating broader software accessibility.
As the tech landscape rapidly evolves, Apple continues to adjust its strategies to meet regulatory requirements and address concerns raised by software developers. With these forthcoming changes, Apple aims to strike a balance between ensuring security and promoting a diverse software ecosystem within Europe.
Apple Faces Challenges in the EU
Apple faces a potential hurdle in its business operations in the European Union (EU). The newly enacted Digital Markets Act aims to address Apple’s monopoly over software downloads and the App Store. Under the act, Apple will be required to review each app that is downloaded outside of its App Store. Additionally, the company plans to impose fees on developers who choose to offer downloads outside of the App Store. Though Apple has not officially announced its plans, they have been working on this change for over a year and have a deadline to finalize them by March.
Legal Battles and Antitrust Rulings
The EU’s decision to pass the Digital Markets Act is influenced by recent legal battles involving Apple. In January, the U.S. Supreme Court declined to hear appeals regarding an antitrust ruling on Epic Games Inc.’s lawsuit against Apple. This ruling concerned Apple’s App Store policies, which were deemed anti-competitive. Although Apple won most of the counts in a federal court case last year, Judge Yvonne Gonzalez Rogers determined that the company had violated California’s unfair-competition law by restricting developers’ communication with users outside the app and limiting their use of alternative payment systems. Despite an appeal to the Ninth U.S. Circuit Court of Appeals, which upheld Judge Gonzalez’s decision, both Apple and Epic have taken their cases to the Supreme Court.
New Policies and Implications
As a response to the ongoing legal battles, Apple introduced new policies requiring developers to pay a 27% commission if they choose to utilize an alternative payment method. This move is reminiscent of similar measures taken by Apple in countries like South Korea and the Netherlands following legal rulings there.
Impressive Stock Performance
Throughout these legal challenges, Apple’s stock has continued to perform well, experiencing a 38% growth in the past year. Comparatively, the S&P 500 has grown by 21% during the same period.