The App Store is changing! What does it mean for Apple to open third-party downloads for the first time in its history?

Less than two months into the new year of 2024, Apple has ushered in two major events of the year.

First, Apple Vision Pro goes on sale, officially opening the era of spatial computing;

The second is the "epic" update of the App Store. Apple's official website officially announced that the Apple Store in the European market will allow downloading of apps from third parties starting from March and adjust the commission ratio for app developers.

The latter is not good news for Apple, but it seems to be good news for European users, creators and the European Union.

For a long time, the App Store has adopted a closed design as its basic principle, and its strict access mechanism has made the Apple ecosystem a safety-first paradise. However, the overly closed policy and high commission ratio have also caused many developers to dissatisfaction.

Apple has also provided a detailed update list on its official website. It can be seen that in order to comply with the requirements of the EU's "Digital Market Act", Apple has also gritted its teeth and stamped its feet, reluctantly cutting a lot of flesh.

The App Store is changing

In general, Apple will adjust the existing policies of iOS, Safari and App Store in the iOS 17.4 Beta version, and will open it to users in 27 EU countries/regions in March 2024. The specific updates are as follows:

iOS changes
– New options for iOS Apps: Developers can publish iOS Apps from alternative App markets, including new APIs (interfaces) and tools;
– Establish a new framework and API to replace the App Market: Market developers can install apps from their dedicated Market Apps and manage updates on behalf of other developers;
– New frameworks and APIs that replace browser engines: Developers can use browser engines other than WebKit (a private property of the kernel browser) for browser apps and apps with in-app browsing experiences;
– Interoperability application form: Developers can make additional requests for interoperability with iPhone and iOS hardware and software functions.

Safari changes
– iOS users can now set third-party web browsers other than Safari as the default browser;
– In the future, in iOS 17.4 or subsequent versions, when opening Safari for the first time, a new selection interface will appear, prompting users in the European Union to select a default browser.

App Store changes
– Open payment processing alternative function, developers can use payment service providers, or the developer’s external website to complete service transactions;
– But for apps that use payment processing alternatives, Apple won’t be able to issue refunds and won’t be able to deal with users who experience problems, fraud, or fraud.

Changes in Commissions and Fees
– . Commission: Reduce the original 30% commission to 17%, and the 15% commission paid by a subscription over one year or small business is reduced to 10%.
– Payment management fee: Developers who use the payment management alternative feature to process payments do not need to pay additional fees to Apple;
– Core technology fee: For non-App Store apps, Apple will not charge a commission, but there will be a core technology fee. When the number of installations exceeds 1 million, 0.5 euros will be paid for the first installation in each year.

Apple said that in the EU, more than 99% of developers will reduce their fees to Apple, and less than 1% of developers will need to pay additional application installation fees.

In fact, to sum up, the biggest impact on users and developers is four points:
1. Apple will support third-party stores, browsers and web engines starting in March;
2. The App Store’s commission rate for developers is reduced;
3. If you use the Apple payment system, you will be charged an additional commission, but if you use a third party, you will not;
4. If users use software from third-party stores, there may be security risks for which Apple is not responsible.

In fact, compared with the previous Apple ecological policy, the above update can be said to be an earth-shaking and a new start. You must know that the revenue of Apple Mall is the highlight of its overall gross profit.

On the eve of WWDC 2023, Apple announced the business and sales of the company's ecosystem in 2022, which will be as high as US$1.1 trillion. As of fiscal year 2022, Apple's service industry gross profit margin is 71.7%, which is nearly twice the gross profit margin of its product business and more than 60% higher than the company's overall gross profit margin. Among them, the “Apple tax”—a 15%-30% commission on digital content consumption of all apps on the App Store—contributed most of it.

Apple has been subject to multiple antitrust lawsuits before, but it has always been unwilling to give up the "Apple tax". This seemingly compromise is actually a counterattack on the premise of complying with the new EU regulations.

The newly added core technology fee is the problem Apple has left for EU developers.

Apple will also give developers an additional 3 percentage points commission discount if they use an alternative payment provider for in-app sales, but this is unlikely to have much of an impact on most developers.

iPhone app developer David Barnard said:

Core technology expenses will cause problems for many companies. Using a different provider may cause some customers to lose interest, as they may prefer to trust Apple to handle transactions.

The EU originally wanted to protect the interests of more app developers through antitrust, but with Apple's several measures in the rules, developers' income will not necessarily increase. Instead, some apps with large download volumes will need to pay more fees. , back and forth, the revenue of these companies fell instead.

The game between the EU and Apple started with the Digital Market Act.

The "Digital Market Act" is a hurdle that Apple cannot avoid

Let’s talk about the conclusion first. If Apple still maintains a closed application ecosystem and continues to collect high commissions, it will face huge fines in the EU market.

The EU's Digital Markets Act (DMA), promoted in late 2018, is a law established by EU regulators to maintain fair competition and innovation in the digital market.

Margrethe Vestager, then the Competition Commissioner of the European Union Competition Commission, played a crucial role in the implementation of the bill. She had always scorned the monopoly of American Internet giants and had repeatedly issued high fines to American companies. During that period, Google In 2006, it was imposed an antitrust fine of 4.34 billion euros (approximately 5.15 billion U.S. dollars at the time).

In March 2022, the "Digital Market Act" was officially announced. The "gatekeeper" criteria are clauses that scare companies. Companies that are judged as "gatekeepers" must comply with the act in the European market, and the identification standards There are three main ones:
– The relevant company has an annual turnover in the EU of €7.5 billion or more in the past three financial years, or has an average market capitalization or equivalent fair market value of at least €75 billion in the previous financial year, and has operations in at least three EU member states Provide the same core platform services;
– Have at least 45 million monthly active end users and at least 10,000 annual active business users in the previous fiscal year;
– The above user thresholds have been met for the past three fiscal years.

The EU wants to pass this law to restrict the market monopoly behavior of large technology companies and require large and influential platforms to allow more competitors to enter the market and provide sufficient transparency in the use of algorithms and data.

Those who meet the above conditions are basically American technology giants.

The "Digital Market Act" will give companies suspected of monopoly a two-year buffer period. In January 2024, the European Union informed major American Internet giants that they need to complete internal corporate rectifications by March 6 and stop the business of any company suspected of monopoly.

If Apple still chooses to be tough at this time, it will face a fine of US$39.43 billion in accordance with the provisions of the Digital Markets Act.

At present, in the EU's "Digital Market Act", the fact that Apple has a local monopoly has been confirmed, but whether it will be characterized as "monopolistic behavior" in other countries and regions still has to wait for the judgment of local courts. .

Despite Apple’s public statement:

These changes will not be made available outside the EU as this is not the most secure system for our users. We are well aware of the new threats DMA poses, including increased risks of malware, scams and scams, illegal and objectionable content, and reduced Apple's ability to respond to and remove malicious applications.

But from now on, Apple's seemingly impenetrable ecological iron wall has been dug into a big hole by the EU. With precedent, Apple is likely to be in a relatively passive position in future rulings.

As for whether there will be Chinese, Australian or Middle Eastern versions of the App Store in the future, it still has to be combined with each country's definition of monopoly.

Regardless of the outcome, one question must be answered: Will the forced openness of the iOS ecosystem be a good thing for developers, users and the market?

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