iPhone to Allow Sideloading and Support Alternate App Stores, Apple Announces

Sideloading in iPhone

Sideloading In March, in iPhone users within the European Union will gain the ability to download apps from third-party app stores , thanks to the implementation of the bloc’s new Digital Markets Act.

The iPhone’s app ecosystem is on the brink of its most significant transformation since the introduction of the App Store in 2008. Apple has revealed its strategy for altering the rules governing the release of iOS software by developers in the European Union, in response to the impending enforcement of the Digital Markets Act (DMA) in March.

A major development is the permission granted for third-party app stores on iOS, breaking the exclusive distribution status of iPhone apps through the Apple App Store. These changes are slated to be implemented with the release of iOS 17.4 in March.

The newly introduced “alternative app marketplaces,” as termed by Apple, will function in the following manner: Users in the EU, operating on iOS 17.4, will have the ability to download a marketplace from its respective website. To be utilized on an iPhone, these marketplaces must undergo Apple’s approval process

Once downloaded, users need to explicitly grant permission for the marketplace to download apps to their devices. However, once approved and on the device, users can download a variety of apps, including those that may contravene App Store guidelines. It is even possible to set a non-App Store marketplace as the default on the device.

For developers, the new system allows them to choose between using Apple’s payment services and in-app purchases or integrating a third-party payment system without incurring an additional fee to Apple. If developers opt to stick with Apple’s existing in-app payment system, they will be subject to an additional 3 percent processing fee.

Despite these changes, Apple intends to maintain a vigilant approach to the app distribution process. All apps must still be “notarized” by Apple, and distribution through third-party marketplaces will be managed by Apple’s systems. Developers are restricted to distributing a single version of their app across different app stores and must adhere to basic platform requirements, such as malware scanning.

The updated expense associated with conducting business.

NFC is being opened up, alternate browser engines are coming, and game streaming is arriving globally

Moving forward, developers in the EU have the option to pay no commission to Apple, contingent on their chosen method of app distribution. Apple is modifying its fee structures both within the App Store and for apps distributed independently. Developers can opt for these new terms or adhere to the existing model, continuing to distribute through the App Store.

According to the updated terms, apps utilizing an alternative payment system and distributed through the App Store will incur a 17 percent commission on digital goods and services, a reduction from the previous 30 percent. For apps eligible for Apple’s reduced “small business” rate, the commission rate further decreases to 10 percent. However, developers opting for Apple’s payment processing system will face an additional 3 percent fee.

The company is introducing a novel type of fee for highly popular apps, termed the Core Technology Fee. This fee will impose a charge of €0.50 (approximately 54 cents) per annual app install, but it comes into effect only after a million annual installs in the EU. Apple anticipates that over 99 percent of developers will either “reduce or maintain the fees they owe to Apple” under the new business terms, with less than 1 percent of developers subject to the Core Technology Fee.

In addition to permitting alternative app stores and payment systems, Apple is expanding access to various aspects of the iOS ecosystem in the EU. For the first time, alternative browser engines to Web-Kit will be allowed, and users will have the option to choose alternative browsers when opening Safari for the first time on iOS 17.4.

The App Store is also opening up to accommodate global game streaming services, which were previously restricted under Apple’s existing policies. Following the recent announcement by the European Commission, Apple is preparing to enable developers in the European Economic Area to offer NFC payments in their third-party apps.

The DMA effect

The DMA represents the European Union’s most significant effort to curb the purportedly anticompetitive practices of major technology companies.

Developers critical of Apple’s control over iOS app distribution are likely to embrace these changes. Earlier this week, Spotify, a vocal opponent of Apple’s 30 percent commission rate, revealed plans to reintroduce in-app purchases in its iOS app for users to upgrade subscriptions or purchase audiobooks in the EU following the implementation of the DMA.

However, it remains uncertain whether the company will accept paying a 17 percent commission to Apple when utilizing an alternative payment processor, given its previous criticism of Apple’s proposal to impose a 27 percent commission on alternative payments in the US.

Enacted in 2022, the DMA represents the EU’s most robust effort to curb the alleged anticompetitive practices of major tech companies, referred to as “gatekeepers” in the regulation.

Apple was designated as a gatekeeper by the EU in September, with its App Store, Safari browser, and iOS operating system classified as “core platform services” obligated to comply with the DMA’s regulations. The European Commission has not provided comments on Apple’s recent announcements.

The regulation encompasses various obligations, including allowing users to install third-party apps or app stores, uninstall stock apps, and change default services. It also requires large messaging services to be interoperable with rivals and prohibits gatekeepers from favoring their own products over third-party rivals in app stores or mandating app developers to use a gatekeeper’s in-app payment system.

In addition to designating iOS, Safari, and the App Store as core platform services, the European Commission initiated an investigation into the possible inclusion of iMessage. However, reports suggest that iMessage might avoid being designated, and Apple’s recent announcement makes no reference to changes coming to iMessage.

Besides Apple, the European Commission designated Amazon, Meta, Microsoft, TikTok parent ByteDance, and Google parent Alphabet as gatekeepers under the DMA. Some of these companies, including Meta, Google, and Microsoft, have publicly announced forthcoming changes in response to the regulation.

While Google’s Android operating system has also been designated as a core platform service under the DMA, it may need to make fewer changes than iOS, as it already technically allows sideloading and third-party app stores, even though its policies around them have been contentious.

Apple has historically maintained a commission even when compelled to permit third-party payments. Following a US ruling that required Apple to allow links to external payments, the company allowed developers to include links but continued to charge a 27 percent commission (reduced from 30 percent). Similar approaches have been taken in South Korea and the Netherlands.

It remains to be seen whether Apple’s changes, including its revised commission rates, will appease prominent critics like Spotify and Epic Games, which have strongly opposed the “Apple Tax.” After years of debates and legal battles, the question arises whether users, especially in the EU, will prioritize alternative app stores and payment methods or stick with Apple’s in-house options.

FAQs: Apple’s Changes and the Digital Markets Act (DMA) Impact in the EU

1. What major transformation is happening to the iPhone’s app ecosystem in March?
   • In March, iPhone users within the European Union will gain the ability to download apps from third-party app stores, marking a significant shift in the app distribution landscape.
2. When will the changes in app distribution take effect on iOS devices?
   • The changes are slated to be implemented with the release of iOS 17.4 in March.
3. What is the significance of the introduction of “alternative app marketplaces” on iOS?
   • Apple is granting permission for third-party app stores on iOS, breaking the exclusive distribution status of iPhone apps through the Apple App Store.
4. How do users in the EU access these “alternative app marketplaces” on iOS 17.4?
   • Users can download a marketplace from its respective website, subject to Apple’s approval process.
5. What are the key aspects of the new system for developers in the EU?
   • Developers have the option to choose between using Apple’s payment services or integrating a third-party payment system without incurring an additional fee. However, sticking with Apple’s in-app payment system incurs an additional 3 percent processing fee.
6. How does Apple plan to maintain oversight in the app distribution process despite the changes?
   • All apps must still be “notarized” by Apple, and distribution through third-party marketplaces will be managed by Apple’s systems.
7. What are the updated commission rates for apps using alternative payment systems in the App Store?
   • Apps utilizing alternative payment systems and distributed through the App Store will incur a 17 percent commission on digital goods and services, reduced from the previous 30 percent.
8. What is the Core Technology Fee introduced by Apple?
   • The Core Technology Fee charges €0.50 per annual app install, applicable only after a million annual installs in the EU.
9. What aspects of the iOS ecosystem are being opened up in the EU?
   • NFC payments, alternate browser engines, and global game streaming services are being introduced, providing users with more choices and flexibility.
10. What is the DMA, and how is it impacting major tech companies, including Apple?
    • The Digital Markets Act (DMA) is the EU’s robust effort to curb anticompetitive practices. Apple, designated as a gatekeeper, must comply with regulations affecting its core platform services.
11. How are other major tech companies responding to the DMA?
    • Companies like Meta, Google, and Microsoft have announced changes in response to the regulation. Google’s Android operating system, also designated under DMA, may require fewer changes than iOS.
12. Will iMessage be subject to changes under DMA?
    • While an investigation into iMessage is ongoing, reports suggest it might avoid being designated, and Apple’s recent announcement does not mention changes to iMessage.
13. How has Apple historically handled commissions when compelled to permit third-party payments?
    • Apple has maintained a commission, as seen in cases like the US ruling, where it allowed links to external payments but continued to charge a reduced 27 percent commission.
14. Will the changes, including revised commission rates, satisfy Apple’s critics like Spotify and Epic Games?
    • It remains to be seen whether these changes will appease prominent critics who have opposed the “Apple Tax.”
15. What will be the user sentiment in the EU towards alternative app stores and payment methods?
    • After years of debates and legal battles, it remains to be seen whether users, especially in the EU, will choose to adopt alternative options or stick with Apple’s in-house solutions.