DMA Compliance: Alternative App Stores But No Sideloading
Developers who offer the ability to sideload their apps in the European Union will still face restrictions and fees imposed by Apple, The Wall Street Journal reports.
App sideloading capabilities will allow users to download apps from outside the App Store for the first time, but only in the EU. The change is necessitated by the EU’s Digital Markets Act (DMA), which seeks to rein in the apparent anticompetitive conduct of big tech companies.
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Apple will apparently retain the ability to review each app offered outside the app store, as well as take a fee from developers that offer them.
I’ve considered it very odd that the DMA is not clear at all about this. And here we are on the cusp of it going into effect, and we still seemingly have no idea whether the European Commission and Apple see eye to eye on what the DMA demands for compliance.
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I have a feeling that fireworks are going to fly when Apple announces their compliance plans, but I don’t know. Maybe Apple has shared their plans in detail with the E.C. and the E.C. is fine with it. But if that’s the case, I don’t see how the DMA “has teeth” when it comes to sideloading.
The Journal did not state what percentage commission or fees Apple plans to collect, but it sounds like Spotify thinks they’re going to offer an iOS app through which they won’t pay Apple anything at all for in-app transactions. Their blog post has a series of before-and-after screenshots, and the “after” screenshots show a purchasing flow that doesn’t involve any of the warnings or scaresheets Apple has required for the “reader” app entitlement, Dutch dating apps, or the new External Purchase Links entitlement.
Apple (Hacker News, MacRumors, MacStories, 9to5Mac):
The changes are available for developers who distribute apps in any of the 27 EU member countries and only apply to apps available and distributed to users in the EU.
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The DMA requires changes to this system that bring greater risks to users and developers. This includes new avenues for malware, fraud and scams, illicit and harmful content, and other privacy and security threats. These changes also compromise Apple’s ability to detect, prevent, and take action against malicious apps on iOS and to support users impacted by issues with apps downloaded outside of the App Store.
That’s why Apple is introducing protections — including Notarization for iOS apps, an authorization for marketplace developers, and disclosures on alternative payments — to reduce risks and deliver the best, most secure experience possible for users in the EU. Even with these safeguards in place, many risks remain.
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To reflect the DMA’s changes, users in the EU can install apps from alternative app marketplaces in iOS 17.4 and later. Users will be able to download an alternative marketplace app from the marketplace developer’s website.
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Through a combination of automated checks and human review, Notarization will help ensure apps are free of known malware, viruses, or other security threats, function as promised, and don’t expose users to egregious fraud.
This is different from macOS notarization, which is a (usually) quick, automated process, without human review.
Developers can choose to adopt these new business terms or stay on Apple’s existing terms. Developers must adopt the new business terms for EU apps to use the new capabilities for alternative distribution or payment processing.
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The alternative business terms for iOS apps in the EU have three primary elements:
- Reduced commission — iOS apps on the App Store will pay a reduced commission of either 10% (for the vast majority of developers, and for subscriptions after their first year) or 17% on transactions for digital goods and services, regardless of payment processing system selected;
- Payment processing fee — iOS apps on the App Store can use the App Store’s payment processing for an additional 3% fee. Developers can use a Payment Service Provider within their app or link users to a website to process payments for no additional fee from Apple;
- Core Technology Fee (CTF) — For very high volume iOS apps distributed from the App Store and/or an alternative app marketplace, developers will pay €0.50 for each first annual install per year over a 1 million threshold.
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Developers who adopt the new business terms at any time will not be able to switch back to Apple’s existing business terms for their EU apps.
Once you have opted in to Apple’s new business terms, you will be locked in to those terms forever.
Because of this restriction, given the ridiculous €0.50 per year per install fees, no developer who hopes their new app will one day have more than 1M installs will choose these new terms, and I have no doubt that is exactly Apple’s intention here.
Updates within the same year don’t count, unlike with Unity. Because of the five App Stores, it sounds like only iPhone apps (not iPad) will be available from marketplaces. Also, there is no true sideloading, after all.
Non-developers don’t seem to know side loading via Safari exists on the iPhone has done since iOS 3.
Technically all Apple needs to do to support side loading is just change one of the code signing requirements.
Estimate how the different models may apply to your business on iOS in the EU.
I think most of what Apple is proposing is acceptable, even good. I think the specifics on the Core Technology Fee need a little tweaking (i.e. free apps in or out of App Store shouldn’t be bankrupted by 1M+1 users), and I hope the EU negotiates on that point.
It makes sense to require proof of a $1M line of credit to run an alternative app store, just so everybody isn’t making one.
Apple’s scary warnings about the risks created by the adoption of these new EU measures are frankly hilarious, given that basically this exact same system—notarization, “sideloading,” alternative app stores—has been in place on the Mac for years.
It is absolutely bonkers that Apple is rolling out all of these major App Store changes but restricting them to Europe.
They’re treating the calls for more openness the same way they treat demands for censorship in China. These are not the same thing.
What if a US developer wanted to target the open EU App Store marketplace? Not sure there’d even be a legal(?) way to test the apps here. Would have to import an EU phone or something, maybe?
Entirely new apps can now exist on iOS for the first time ever (video game emulators! clipboard managers! virtual machines!), but I seriously doubt many apps will leave the App Store
Still trying to unpack all the new Apple/EU stuff, but at first glance, it does actually look like a big class of apps will be able to avoid Apple’s rent seeking entirely. But there are a million asterisks and new clauses to consider!
Previously:
- StoreKit Purchase Link Entitlement for United States
- Apple’s Five App Stores
- Unity Runtime Fee
- DMA Gatekeepers Designated
- Proposed Japanese Law for Alternate App Stores
- countryd
- Sideloading Rumored for iOS 17
- Apple Working on Sideloading for Europe
- EU Approves Digital Markets Act and Digital Services Act
- Proposed Digital Markets Act to Require Sideloading
Update (2024-01-26): M.G. Siegler (Hacker News):
Earlier today, I laid out why I thought Apple might end up taunting the EU with any changes they implement to comply with the Digital Markets Act (DMA) laws set to take effect in March. And after a roughly 30 minute honeymoon period when folks thought Apple may actually be turning over a new leaf, it’s pretty clear how Apple feels about these changes that they’re being made to implement.
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I mean, this press release is pretty bonkers. To showcase this truly amazing tone and tenor for corporate communications, I will literally highlight the best parts[…]
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I’m honestly not sure I can recall a press release dripping with such disdain. Apple may even have a point in many of the points above, but the framing of it would just seem to ensure that Apple is going to continue to be at war with the EU over all of this and the only question now is if these changes placate the body at all. Typically, if you’re going make some changes and consider the matter closed, you don’t do so while emphatically shoving your middle fingers in the air.
Apple clearly has no intention to comply with the DMA. Apple is introducing new fees on direct downloads and payments they do nothing to process, which violates the law. This plan does not achieve the DMA’s goal to increase competition and fairness in the digital market – it is not fair, reasonable, nor non-discriminatory.
App developers in the European Union who choose to opt in to Apple’s new business terms must pay an €0.50 “Core Technology Fee” or CTF for every app install over one million installs, a model that has the potential to bankrupt free or freemium app developers.
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Under Apple’s new business terms, a free or freemium app that gets two million annual “first installs” would need to pay an estimated $45,290 in fees per month according to Apple’s fee calculator, or more than half a million dollars per year, even if no money is earned.
Because this scheme worked out so well for John Riccitiello.
Under the App Store’s new fee structure for Europe, if you make $10 million in sales, Apple’s cut is $6.2 million annually.
Assuming you have no operating costs or salaries, your take home amount: $2 million after tax—or 20% of your sales.
Apple says that anyone looking to develop an alternative app marketplace will have to provide evidence that it can financially “guarantee support for developers and customers.”
To create an alternative App Store you have to: “Provide Apple a stand-by letter of credit from an A-rated financial Institution of €1,000,000 to establish adequate financial means in order to guarantee support for your developers and users.” 🤣
I’m still shocked by the fact that Apple’s DMA compliance plan is to charge developers more money to use the DMA compliant version of their product.
Tim Sweeney (via Emma Roth):
Apple’s plan to thwart Europe’s new Digital Markets Act law is a devious new instance of Malicious Compliance.
They are forcing developers to choose between App Store exclusivity and the store terms, which will be illegal under DMA, or accept a new also-illegal anticompetitive scheme rife with new Junk Fees on downloads and new Apple taxes on payments they don’t process.
At first glance, it could seem like Apple actually attempted some semblance of good faith compliance with the Digital Markets Act that goes into effect March 7 in the EU. But once you start peeling the onion, you realize it’s stuffed with poison pills so toxic you can scarcely believe Apple’s chutzpah.
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That’s $135 MILLION DOLLARS per year. Just for the privilege of putting Instagram into a competing store.
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And Meta has many successful apps! WhatsApp is even more popular in Europe than Instagram, so that’s another $135M+/year.
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This poison pill is therefore explicitly designed to ensure that no second-party app store ever takes off. Without any of the big apps, there will be no draw, and there’ll be no stores. All of the EU’s efforts to create competition in the digital markets will be for nothing.
See also: Dithering.
You should be aware that:
⚠️ Apps stay installed forever, because people never delete apps. So they will update for years (until user switches devices, I guess). And you’ll pay the core platform fee all this time.
⚠️ These paid install rates are NOT paid user rates. 10% paid install rate translates to a whopping 25% paying users per annual new download. (yes, comparing apples and pears) Given there’s churn at so many stages, you’ll need phenomenal conversion and retention rates to get there!
Seeing this, I’m convinced this is an intentionally rigged game and actually also a honey pot. A trap for new developers to sign up for a mode that might (will?) eventually kill them.
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It’s a mathematically hidden way of saying „Fuck You“ to regulators and the industry. Dressing up nicely and acting like your friend, but coming for you once you bite, inescapable. Basically, a trojan horse.
Free apps are going to be massively, disproportionately affected by Apple’s Core Technology Fee, which is why I don’t think it will stand as-is.
If you have just 2M users on a completely free app, you’re looking at $45,290 in monthly fees to Apple, or half a million dollars a year.
Also note that this would apply to Freemium apps too — you have to either guarantee you won’t hit 1M downloads or reinstalls over a year, or you need to ensure every user pays upfront. You can’t be free with IAP or it could easily bankrupt you.
Under what possible theory of antitrust regulation is it acceptable for a monopoly to decide what companies are allowed to compete with it, and on what terms they can compete?
This is not sideloading in any commonly used term. Particularly with the financial requirements and the Core Technology Fee, it is devolved monopoly. A third-party marketplace is required to have significant amounts of cash on hand, and driven to be able to recoup €0.50 per first annual install of its own marketstore app (which do not get the one million "grace" window).
On the other hand, there is a sliver of a legitimate point that for aspiring actual marketplaces, being able to provide all the things that such a marketplace should provide. But marketplaces are the answer to a not-locked-down App Store. Sideloading is the answer to a not-locked-down Ad Hoc Distribution; this quadrant is as missing now as it ever was.
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Apple is digging in on its world view that no developer can ever be trusted, even directly by a user. Shipping a bug fix update straight to users, without having someone on Apple QA it, is not possible.
This is not really “sideloading” or the Mac-esque experience some have been envisioning because these “marketplace apps” — as Apple is calling them — will be the only other way of installing native iOS apps. The way you will get the marketplace apps themselves, Apple says, is via the web, but other kinds of third-party software are not able to be installed on an iPhone this way. In other words, you can download apps from an app store or the App Store.
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These features are only available to E.U. users, and Apple is being as restrictive with these changes as it is for censorship in China. One cannot simply change their iPhone’s region in Settings to an E.U. member state. As previewed last year, there is a new process that validates feature availability based on, according to Filipe Espósito of 9to5Mac, the billing address on file and the device location, among other qualities.
Still, if Apple can be an Irish company for tax reasons, my iPhone should be able to become Irish for device control reasons.
Options to install apps through alternative app stores will only be available in the countries listed above, and elsewhere in the world, there will be no changes to how apps are installed and distributed.
I wonder if Apple’s EU App Store changes will cause a number of businesses to reincorporate outside of the US.
This isn’t the sideloading future some wanted, as app developers will still need to distribute their apps through a marketplace. This means someone like Tapbots will still need to submit Ivory to other marketplaces and they will not be able to just sell their app on their website and let the user download a
.appfile like they can with Mac apps.Marketplaces who want to have alternate app stores on the iPhone and iPad need to get a special entitlement from Apple, much like devs have to do today to get CarPlay, for example.
With this week’s App Store changes for the EU’s Digital Markets Act, let’s revisit how Apple is doing with those four points[…]
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This is all pretty disappointing. I have been bitter about the App Store for years, but yesterday I tried to keep an open mind. I was initially excited about the potential for marketplaces. I blogged that it seemed like a good-faith effort to comply with the DMA. Apple had put a bunch of work into this, in documentation and new APIs. The more I understood it, though, the less compelling it became. In some cases it will be worse than what we had before.
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The problem is Apple’s total control over app distribution, and so the only permanent fix for the App Store is removing that control with true sideloading[…]
This is a big nothingburger. If you work your way through all the constraints of the new model (and still find it worthwhile somehow), it still requires a centralized review for notarization and does not address (or improve) the case of people wanting to run their own code on their own devices at all – you still need to pay the $99 fee and go through all the existing hoops.
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But, most importantly for me personally, this kills any notions one might have of hobbyist developers creating and testing small apps for friends and family–especially if you’re a kid[…] So yes, I’m getting my kids a couple of cheap Android tablets for prototyping.
Nothing, nothing for the majority of the iOS customer base should change. A minor portion of big businesses will try to create either their store or host their binaries. Most likely all of these initiatives are going to be abandoned, like they abandoned their Apple Watch apps and iMessage apps. They do not care, and they won’t care when they see their metrics are dead in comparison to the App Store metrics. What Apple did here with their reactive defensive approach is a strategy to make sure the App Store platform remains the same. We all, me included, are not happy with the App Store policies and we want the App Store to change. Laws and regulations are not the way to do it. The change has to come from creative energy, not force. The only good change that can come is driven by the creative mindsets of brilliant people working hard right now on the future of computing.
I find it so weird people suddenly act like macOS and Windows just don’t exist when talking about iOS app distribution.
All these ridiculous arguments saying Apple deserves to tax developers whatever they want and the ecosystem can’t possibly exist without the AppStore.
The App Store dispute can be boiled down to one big question: Is the iPhone a computer or not? If it’s a computer, we ought to have the right to compute. Like consumers have won the right to repair. If it’s a computer, it ought to be yours, and you ought to have the right to install whatever software you should so choose.
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Mac developers are rightfully worried that this golden era of computing is coming to an end, though. That Apple is signalling a future where every piece of software that runs on computers has to be approved by app store bureaucrats, busy protecting the business model of the platform. And I think they’re right to worry about this, so now is the time to enshrine this right to compute. While people still remember what it’s like to be free to install software of their own choice.
The irony here is that Apple has the best argument for why that freedom is perfectly compatible with a safe computing platform: The Mac. It’s has been an incredibly stable and secure platform for over twenty years now.
As is painfully clear from Apple’s press release on Thursday, the company deeply dislikes being mandated by law to make these changes. At every turn, while assuring the public that Apple is going to do its best to keep users as safe and secure as possible, it stops to point out that the DMA will make iOS less secure.
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That said, the existence of these features almost certainly ensures that the EU won’t be the only place to have them. Undoubtedly, every other legislator and regulator in the world is watching this situation and preparing their own DMA-like regulations. Some may rush in, while others may wait and see just what happens.
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I have to think that Apple will have a team of security people watching carefully as these features roll out across the EU. But there will also be a team of PR people ready to publicize any incident that feeds into Apple’s narrative about the DMA endangering EU citizens.
This is a risky game for Apple, though. As the rest of the world watches to see the result of what will happen in Europe, Apple’s statements about the dangers of sideloading will be put to the test. If there aren’t major security issues with the rollout of these new features, Apple’s protests will be revealed as toothless and self-serving, and these changes will likely be mirrored all over the world.
I’m sure Apple will eventually take down this obvious scam, but for now they’re just busy nailing down exactly how to comply with the letter but not the spirit of pro-competition laws around the world.
Whatever about the business side, the technical aspects of how Apple is enabling alternative app stores on iOS are quite amazing. Beyond MarketplaceKit, third party app stores link into App Store Connect, and developers still register their apps on ASC, and notarize them there. There’s a foundation here that I think has great potential to enable whole new aspects of iOS.
If the EU makes them drop the fee + the US passes the Open App Markets Act to make them bring it to the US (at which point they’d hopefully give up and launch it worldwide) it could be a bright new age for iOS, yes.
It’s really wild to me that the current Apple news cycle has folks talking fondly over the Mac turning 40 and instead of getting back to those roots, Apple doubled down on malicious compliance in the EU. Also, podcasts now get transcripts, which is a great move for accessibility.
Basically today’s Apple will have moments of being wonderful and terrible all in the same day and it feels that there’s some inconsistent leadership.
Update (2024-02-01): Sarah Perez (Hacker News, MacRumors):
On Friday, the [Spotify] issued its response to Apple’s new DMA rules, calling the new fees imposed on developers “extortion” and Apple’s compliance plan “a complete and total farce,” that demonstrated the tech giant believes that the rules don’t apply to them.
Anti-big-business regulation and pro-consumer results often do go hand-in-hand, but the DMA exposes the fissures. I do not think the DMA is going to change much, if anything at all, for the better for iOS users in the E.U. (Or for non-iOS users in the EU, for that matter.) And much like the GDPR’s website cookie regulations, I think if it has any practical effect, it’ll be to make things worse for users. Whether these options are better for developers seems less clear.
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Schiller is the only Apple executive quoted in the press release, and to my ear, his writing hand is all over the entire announcement.
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But marketplace apps must be real “stores”. A marketplace can decide to exclusively distribute apps from a certain category — like games — but must be open to submissions from any developer in that same category. Company XYZ can’t create a marketplace that only distributes XYZ’s own apps. That’s not a proper category.
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But this also means that if, say, Meta starts distributing their apps through a third-party marketplace (perhaps their own Meta Store), and wishes to encourage iOS users to switch from App Store installations to installations from the Meta Store, each user who does so must delete their existing installations of Meta’s apps before installing the new ones.
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Apple representatives I’ve been in briefings with — multiple times over the last two days — emphasized that content restrictions that apply to apps distributed in the App Store will not apply to those distributed exclusively in EU marketplaces. […] Apple’s review process will continue to involve both automated checks and human review. Private API usage will not be permitted.
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The delicious irony in Apple’s not knowing if these massive, complicated proposals will be deemed DMA-compliant is that their dealings with the European Commission sound exactly like App Store developers’ dealings with Apple. Do all the work to build it first, and only then find out if it passes muster with largely inscrutable rules interpreted by faceless bureaucrats.
So, a key point to take away from Thursday’s announcements is that as far-reaching and complex as they are, they are simultaneously very carefully constructed to address just three regulation-worthy products. That’s also why the changes only apply to people in the EU.
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However, that begs the question of why Apple would charge the CTF for free apps in the first place. My guess is that it’s to encourage large free apps to stay in the App Store fold where Apple can review and regulate their behavior because, historically, free apps have engaged in the most egregious privacy violations.
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I expect that there will inevitably be stories of people who have gotten caught up in weird geographic edge cases, but Apple says they’ve thought through this. Simply vacationing outside the EU won’t eliminate access to app marketplaces, for example. Nor should working in a non-EU country but living in the EU. But moving outside the EU for an extended period will eventually end your access to third-party marketplaces and updates to any apps you bought.
I’m not a lawyer but…
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Paragraph 4 does sound like the Core Platform Free actually not being allowed – at least for apps on alternative App Stores.
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Does sound like the way App Review is set up for alternative app stores is also beyond boundaries. Looking for bugs is definitely beyond the gatekeepers allowed interference.
Apple co-founder Steve Jobs described the computer as a bicycle for the mind. But he failed to let that metaphor shape his greatest achievement, the iPhone, which has become a shackle for the soul.
The iPhone is a computer; you just can’t use it as one most of the time because it’s a closed system. You’re not free to install software that Apple has not approved, unless you “jailbreak” the device – the very term suggesting unlawful transgression rather than a right that follows from ownership.
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While legal experts expect the EU to challenge Apple’s insincere compliance with the DMA, developers should take this opportunity to rethink their native app serfdom. They should push web apps to their limits and then demand further platform improvement.
This also ignores the fact that the app developers offer immense value to Apple. But for the presence of millions of apps on its App Store, Apple would not be able to sell many iPhones. To illustrate why 20% is excessive use the following thought experiment. Would Apple maintain an App Store if the standard commission was reduced to 5%? It would. And what if the commission was 0%. It still would because it would have no choice. People expect to be able to download Netflix, Uber, Tinder, Spotify and many other apps on their iPhones. No apps mean no iPhone sales, which represent the bulk of Apple’s revenue. In other words, the commission is nothing but an illustration of Apple’s bottleneck power.
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As to whether the reduced commissions comply with FRAND. The answer is an unequivocal no. These commissions are not fair and reasonable for the reasons described in the preceding paragraph. But they are also discriminatory. The reason is that app developers whose apps sell digital goods and services and those whose apps don’t, effectively use the same app store services, but are treated differently. Only the former pay a commission.
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The objectives of the DMA are to bring contestability and fairness in digital markets, and this is not achieved here. Apple shows disdain for both the DMA and app developers. Its approach to DMA implementation appears to do little for users, other than to deprive them from meaningful choice on the need for protection. That should not be tolerated. Unless Apple make significant changes to its implementation plans, which it will likely not do, the EC should open infringement proceedings on 7 March 2024. Apple’s proposed plans are so at odds with the company’s obligations under the DMA, that EC officials will have no choice.
There’s going to be a huge land grab by every one of these already monstrous companies. Sure, there’s no other way to have competition without it, but it doesn’t foster competition where the concentration of power and wealth is distributed to a wider array of smaller developers. We’ll just get to pick our poison — or, more accurately, people in the EU will get to pick their poison. We get to envy their poison-picking from Freedom Fry Land.
It seems pretty obvious that Apple’s attempts to contain the concessions they’re making in various markets to just those markets is not in any way a permanent solution. I do hope they have a better plan this in mind for the rest of the globe, or at least are planning to learn some lessons from this rollout in the EU, because I don’t want everything I do on iOS to be all the big tech companies shouting MAKE US YOUR DEFAULT APP STORE in my face in the all the apps and websites that are, for a variety of reasons, indispensable.
In many ways, it is the opening gambit. The Digital Markets Act leaves much to interpretation and the EU regulators have essentially left it up to companies to apply the law, and then assess whether the changes that companies implement is sufficient. I view the published Apple rules as a working proposal, very much subject to change. Apple would rather it wasn’t weakened from here, of course, but I think the EU has shown that it is operating proactively and will follow up with addendums of legislation and enforcement action, as it sees fit.
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But, Apple stacked the deck well. The upside is relatively small. Assuming you are switching away from the 85%/15% split of the Small Business Program, you’ll now be paying 13% commission (10% App Store + 3% IAP). That’s only a saving of just 2% compared to the status quo. In exchange, you bear a huge downside risk of CTF fees if your app grows and crosses the million install mark. You are basically betting your app will never get big, for the entire lifetime of your company, in exchange for 2% extra revenue. That doesn’t sound like a very compelling proposition.
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Apple remarks that it estimates less than 1% of developers would pay any CTF fees, because most apps don’t clear a million annual installs in the EU. But it’s the 1% that are really driving these changes. It’s precisely that 1% that lobbies governments and motivates the creation of the Digital Markets Act in the first place. Spotify, Epic, Netflix, Tinder, etcetera.
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By the way, Apple also imposes the CTF on the app marketplaces themselves, which conveniently prevents these alt-stores from being open season charities. By necessity, the marketplace will need their own intermediary business model to at least afford the Apple fees for every user that installs them.
Darrell Etherington (Hacker News):
What should be a tad more surprising is how willing Apple is to whine and mewl to its customers about how much it doesn’t like this, and about how it thinks this will be bad for them — the users, who Apple seems to consider its weak-willed wards in some regards.
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It’s extremely understandable why Apple doesn’t want to make these changes; Apple’s control of the App Store, and its cut of purchases (typically 30%, with some exceptions) represents a significant chunk of its service revenue, which could have a material impact on earnings if eroded over time. What isn’t so understandable is just how petulant the company is being about prying open fingers on its tightly closed fist when it comes to compliance here.
Lawmakers are already looking to poke Apple’s monolithic business in various spots to see if it isn’t creeping into antitrust territory — or, as in Europe, already enacting laws to limit their control and power. Acting like a kicked puppy when it comes to actually putting these things into practice isn’t going to convince these regulators of Apple’s arguments that these kinds of measures aren’t needed and are in fact user hostile.
I keep seeing it floated that ‘if you have a million users, and you don’t have a way to make money, what are you even doing?’, which is incredibly toxic. Screw everybody who provides free software/tools, I guess?
I guarantee you every single one of you relies on software that has more than a million users and makes $0, somewhere in your tech stack.
Having a single app like that in your portfolio, even if you have robust paid apps, could be enough to bankrupt you under Apple’s CTF proposal
Here’s an easy one: Mastodon
There are a lot of apps (and games for that matter) like that on the App Store where people download and use them, but they just aren’t that valuable and don’t monetize well. That’s ultimately a net benefit to consumers, but would be discouraged for any apps that sign up for the “New capabilities and terms” offered in the EU.
Any app that signs up (and operates on the App Store, in a Marketplace app, or both) will be forced to ruthlessly monetize and be carful about low-intent installs. If not, they could easily end up paying Apple far more than 30% of revenue. Some might even end up owing Apple far more than they ever could make (like I would’ve with my app).
Amusingly, getting featured by Apple often brings low-intent installs. So for apps that stick it out in the App Store but sign up for the new terms, Apple could actually wreck their business (intentionally or not) by featuring their app.
The Core Technology Fee even disincentivizes developers from updating their apps, which explicitly goes against Apple’s stated goal of putting users first.
App review is not security. Malware and scams get through regularly. Only the OS can provide real security. Apple can add antivirus to iOS if they want to, like every other platform has.
They don't want to because they want to keep forcing everyone through app review so they can control what apps we can use and take a cut of apps' transactions with users.
iOS lockdown was based on two lies, both told by Steve Jobs:
1) “You don’t want your phone to be an open platform. You need it to work when you need it to work. Cingular doesn’t want to see their West Coast network go down because some application messed up.”
2) “We don’t intend to make any money off the App Store. We’re basically giving all the money to the developers and the 30 percent that pays for running the store, that’ll be great.”
Any other justification is revisionist history.
Imagine if all the work Apple put into dodging the DMA was put into helping developers and making the App Store an even better platform for developers.
At this point, Apple is burning so much goodwill with regulators, developers, and even probably some consumers who see the headlines about Apple being so obstinate, if they ever do drop the commission and make the App Store an obviously better place to transact with customers than on the web, I think a lot of developers will refuse to come back out of spite even if it makes business sense.
You also can’t transfer apps from accounts under the new terms to accounts under the old terms. There’s no way to back it out without setting up a new developer account and app bundle.
See also: App Store Review Guidelines History.
Update (2024-02-05): Steven Sinofsky (via Jim Rea):
As I read the over 60 pages of the DMA when it was passed (and in drafts before that, little of which changed in the process) my heart sank over the complexity of a regulation so poorly constructed yet so clearly aimed at specific (American) companies and products. As I read through many of the hundreds of pages of Apple documents detailing their compliance implementation my heart sank again. This time was because I so thoroughly could feel the pain and struggle product teams felt in clinging to at best or unwinding at worst the most substantial improvement in computing ever introduced—the promise behind the iPhone since its introduction. The reason the iPhone became so successful was not a fluke. Consumers and customers voted that the value proposition of the product was something they preferred, and they acted by purchasing iPhone and developers responded by building applications for iOS. The regulators have a different view of that promise, so here we are.
As usual, I disagree with Sinofsky. I don’t think Apple’s vision for the App Store was the reason for iPhone’s success, nor do I think its response to the DMA is meaningfully unwinding that. And I don’t think that consumers can be said to have voted for a specific part of the value proposition given that there are so many differences between the very small number of smartphone choices.
To understand the Apple case, I think it helps to see what transpired with Microsoft first. Below is my opinion and reflection, but it is not a history or full 360° view.
iOS/Android views aside, I also find much of his Mac vs. Windows commentary ahistorical, but I’m linking to this because he obviously has an inside perspective on the antitrust years at Microsoft.
Speaking to investors on Thursday during Meta’s Q4 earnings call, Zuckerberg called Apple’s new rules “so onerous” that he would not be surprised if any developer adopted them.
There’s usually a point in the day when I reflect on the fact that some people seem to believe that the makers of computers are owed a tithe by every software developer who creates something wonderful which runs on their platform. And I end up wondering what in the seven hells went wrong.
Update (2024-02-06): Andy Yen:
Apple’s policy is actually worse than abusive — it’s also bad for privacy as it penalizes app developers who use subscriptions as opposed to an ad-based business model (one of the reasons why Apple is not actually a privacy company despite all of their advertising).
While almost everyone agrees that this is terrible, Apple’s idea of addressing these concerns is to provide an alternative so bad that the current shakedown scheme seems good in comparison.
In an interview with Fast Company’s Michael Grothaus published today, Apple’s former marketing chief and current App Store head Phil Schiller said there are privacy and security risks associated with these alternative app marketplaces[…‘
[It’s] entirely possible that if a user wants a certain app, they may be forced to download it from a certain app store. A developer may choose to remove its app from Apple’s App Store and instead sell it only through its alternative app store. This is what Epic seems to be doing with its Fortnite game, announcing that it will be making it available via its new alternative iPhone app store.
Last I heard, Apple was the one blocking Fortnite from coming back to the App Store.
Amping up the FUD. One mention that the Mac uses this very same mechanism and there’ll be no story here.
The fundamental problem with this “some apps will only be available on 3rd party stores” argument is that it focuses on the theoretical - and extremely unlikely - possibility of a popular app that’s already in the App Store voluntarily leaving it, and ignores the much more plausible one of apps that can’t be in the App Store (either because they’re not allowed or because the business model doesn’t work) only being available at all because there’s now an alternative.
The juxtaposition of “everyone can code” and “no one can sideload” is conspicuous.
Update (2024-02-07): See also: Upgrade and Accidental Tech Podcast.
Update (2024-02-14): Morgan Meaker (via Hacker News):
A battle for control is taking place inside iPhones across Europe. While Apple introduced new rules that ostensibly loosen its control over the App Store, local developers are seething at the new system, which they say entrenches the power Apple already wields over their businesses. They’re now breaking into a rare open revolt, mounting pressure on lawmakers to step in.
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So competition, not choice or freedom. But of course--this is the EU Commission we're talking about, after all, and competition is always the greatest virtue. While it probably will give us some new categories of apps, I'm not convinced it's a healthy bargain, both because it clearly puts limits on developer growth outside Apple and therefore inevitably continues to drive a clear preference for the exclusive App Store deal with all its stupid restrictions, and because the incentives that drive Apple's stores can and will inevitably befall any alternative: there will be no F-Droid equivalent to iOS, for instance. So I'm afraid that this will mostly turn out to be a pyrrhic victory, as usual, and I don't really understand what the fist-pumping is all about.
It's funny, Apple claims it cares about its users and their privacy.
Yet Apple must know that "free apps" usually come with Spyware in-built, because the auction to show you advertisements is spyware: https://www.iccl.ie/wp-content/uploads/2023/11/Europes-hidden-security-crisis.pdf
Yet, they just try to extort as much money and control as possible from people who sell their software instead. https://world.hey.com/dhh/apple-s-new-extortion-regime-to-keep-big-app-makers-d4d03ea9 Indeed, they believe themselves more powerful than the law, refusing to comply in good faith. https://world.hey.com/dhh/apple-actually-lost-a-court-case-for-once-but-they-refuse-to-comply-in-good-faith-2bc316a5
So, they are either very very stupid (unlikely) or they are liars and hypocrites.
It's funny though: the "core technology fee" in the EU and the US seem to be very different (0.50 per month (???) versus 27% per sale).
I wonder what the legal minds in the EU think about this flaunting of the intent of their laws. It would be good if Apple were vigorously fined and forbidden to sell its wares until it starts behaving. That would dent its stock price, and cause it to change its tune very quickly. Because if the EU lets this precedent stand, they can forget about enforcing any other such legislation (and laws are their only product).
Presumably 3rd party stores will allow app providers to set a maximum number of allowed installs: this app can only be installed by 950,000 users, to avoid the core technology fee. The the app developer can develop "Bla Bla 2" with sufficiently different features for Apple to concede that this is a new app.
So no 27% tax on apps sold through other app stores?
And apple reducing the tax on their own store?
Am I reading this wrong?
About the default render engine: would it be possible to specify a prefered render engine to your PWA, so to mitigate any incompatibilities between engines?
@Kristoffer Still reading about this, but I think so. However, if you agree to that you may eventually be subject to the Core Technology Fee, which is something of a poison pill.
The CTF seems like BS, because isn't the $100/year developer fee supposed to pay for that?
I've argued in various comments here over the years that Apple's App Store money grab makes no sense whatsoever, primarily because apps from Facebook and Google etc use up the most resources but they pay Apple $0, and they also (AFAIK) pay the same $100/year fee as everyone else. Surely all the downloads of those apps are costing Apple more than $100/year. But instead, they screw the indie devs who aren't selling your personal information, aren't showing any ads, and just want to make a living from their work. Facebook won't have any problem paying the CTF because they're making more than 50 euros a year from each user anyway.
This whole thing is Apple putting lipstick on a pig. I hope the EU Commission calls them out for this BS disingenuous attempt to open up their ecosystem. Apple should get rid of the CTF. Developers are the ones making iPhones useful, but Apple treats devs like they're a bunch of freeloaders. As a longtime Apple customer, I've seen them do some sneaky anti-customer stuff over the years but their greed with the App Store is really something else. This attempt to comply with the DMA is nothing but smoke and mirrors -- it seems good at first glance, but when you run the numbers it makes no sense at all. Hopefully the EU Commission sees through this baloney and demands even stricter rules for compliance.
Spotify is not amused: https://newsroom.spotify.com/2024-01-26/apples-proposed-changes-reject-the-goals-of-the-dma/
Dutch Professor of law thinks Apple is taking the European Commission for fools: https://theplatformlaw.blog/2024/01/26/when-apple-takes-the-european-commission-for-fools-an-initial-overview-of-apples-new-terms-and-conditions-for-ios-app-distribution-in-the-eu/
One of the deals-with-the-devil you make as a corporation is to take on a fiduciary responsibility toward your shareholders. If you don't act to maximize shareholder value, the board could be ousted or in extreme cases sued by the shareholders. While not completely inflexible, this mandate makes it very difficult for corporations to act decently. With very few exceptions, they *must* maximize short-term revenue.
After years of App Store profitability, it would be very risky for Apple to let that disappear overnight. Hopefully, the laws will be appropriately tweaked and these practices will stop. Once Apple can say, "we tried, but the EU passed laws we couldn't circumvent," the shareholders can't complain.
[While they're at it, I hope they pass laws stopping the "everything is a subscription" trend we're seeing now.]
@Keith:
Or Apple could tell their shareholders: "We need developers to discover killer apps for our future growth platform Apple Vision Pro and make it succeed. We think it could be bigger than the iPhone, but it won't be, if there's no reason to buy it. To do that we must show flexibility and willingness to collaborate with these 3rd parties. By rationalizing our policies with respect to apps, we'll lose a little now (as we do when we perform R&D), to win a much larger cake later. It's also obvious the way governments are turning, and we can reduce our conflict with them before we generate too much ill will which could impede our long term growth prospects by getting ahead of this change."
So, no, I don't think fiduciary responsibility is forcing them to behave like "petty self-entitled asshats" to quote Kristoffer. Indeed, their behavior is more reminiscent of a fly-by-night operator, grabbing all it can as soon as it can, than a company which believes it can win in the future by its innovation.
@Keith
My understanding is that ‘fiduciary duty’ does not mean ‘maximize short-term profits for shareholders’, at least in the US. It’s a much more vague notion about duties of ‘care’ and ‘loyalty’:
“The bottom line is that even if you think that corporate boards have a duty to maximize stock prices, they can still choose any course of action that is plausibly related to that goal over any time period they choose.”
https://medium.com/bull-market/there-is-no-effective-fiduciary-duty-to-maximize-profits-939ae50d0572
Wait! So if I opt out of Apple hosting my apps and and using their payment system, I still have to pay Apple if I get popular outside of their store?
Apple really had developed into a trash company, I simply don't know what else to say. Rent seeking, that's all they do now?
The simplest way for Apple to monetise the App Store is to change Apple Developers into types.
1) Small developer: $100/year, an individual or organisation or private company, no revenue or revenue is less than $10 million/year
2) Large developer: $10000/year, an individual or organisation or private company, revenue is more than $10 million per year
3) Public developer: variable rate that's negotiable, publicly listed company
Thats it. It's sorted.
