Tech rivals hound Apple over EU App Store plans
There's one thing uniting big and small tech companies operating in Europe: they can't stand Apple's approach to complying with the European Union's new Digital Markets Act.
Why it matters: The DMA forces Apple to make sweeping changes to its app store, after years of resistance citing user security and privacy.
- Competitors sense a rare opportunity to use their leverage with EU officials to push Apple further.
- "If Apple's current system remains basically intact in five years' time, the DMA will not really have had any meaningful impact," Nick Clegg, Meta's president of global affairs, told Axios.
What's happening: The DMA designates six big tech companies as online gatekeepers — Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft — and obligates them to open their platforms to competition.
- It's up to the gatekeepers to decide how to comply with the DMA, and that's generating fierce debate about what is or isn't DMA compliant, ahead of a Mar. 6 implementation deadline.
- Apple's compliance plan allows developers to set up alternative app stores and avoid Apple's in-app payment system. But Apple will still charge a commission, and the company has added new technology fees and payment processing fees for allowing an app to be used on its devices.
- App developers can't offer their apps directly through their website but will need to use a third-party marketplace to escape Apple's App Store, and that marketplace must also give Apple an annual "letter of credit" from a financial institution of €1,000,000 (around $1.1 million).
- In addition to big companies getting rid of settings like default web browsers, smaller players such as Spotify are previewing their App Store bypass plans.
Between the lines: Apple is defensive of its app store ecosystem because of the high profit margins it generates — around 70% compared to 40% for hardware.
What they're saying: Clegg accused Apple of using "an immense amount of muscle" to maintain its "walled garden."
- Epic Games CEO Tim Sweeney called Apple's plan a "horror show" of "malicious compliance," saying Apple could simply "block Epic from launching the Epic Games Store and distributing Fortnite."
- "A new low, even for them," said Spotify CEO Daniel Ek. "They don't think the rules apply to them."
- Others chose softer language but piggybacked on Ek's comments —Microsoft Xbox President Sarah Bond replied to Ek on X that "Apple's new policy is a step in the wrong direction," while Mozilla told The Verge that it was "extremely disappointed."
- Proton, an open source software company, sees the DMA as its best chance to overcome big tech companies preferencing their own products on devices, but accuses Apple of trying to take a cut even when developers opt out of the App Store.
- Nikita Bier, creator of The Gas App (an app for teens that was recently acquired by Discord), said he would "never launch an app in Europe," calculating that under Apple's new European fee structure, Apple could take $6.2 million from $10 million in sales on the continent.
The other side: An Apple spokesperson told Axios that its teams spent "tens of thousands of hours" developing a DMA compliance plan.
- The company said that under its plan, "99% of developers would pay the same or less to Apple."
- The plan includes "more than 600 new APIs and a wide range of developer tools," Apple said — but the company also believes that, despite these efforts, "the DMA's changes will result in a less secure system" for its EU-based users.
The intrigue: Meta sees itself as both a "victim" and "hopefully a beneficiary" of the DMA, Clegg says.
- Meta's Ray-Ban smart sunglasses perform "significantly worse" on iOS than on Android, Clegg said, leaving him frustrated that basic performance issues are "out of our control."
- Apple will not expand its DMA compliance outside the EU, contrasting the approach it took, along with Meta, to the EU's General Data Protection Regulation, which they applied as a de facto global privacy standard from day one of the regulation.
Yes, but: Meta may want to take Apple down a notch in Europe, though it's balancing other agendas.
- An EU push to make WhatsApp and iMessage interoperable is frustrating to both companies.
- "There's very little evidence that consumers really demand this," Clegg said. "People use these end-to-end encrypted messaging apps precisely because they are private and secure." The companies now have "armies of engineers" working on the issue, he added.
Editor's note: This story has been updated with additional comment by Apple.