Jan 31, 2024 - Technology

Tech rivals hound Apple over EU App Store plans

Illustration of the App Store logo surrounded by angry face emojis and thumbs down emojis.

Illustration: Aïda Amer/Axios

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."

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.

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