Ultimately, the details of how Apple will implement these changes will depend on how its lawyers interpret the Digital Markets Act. “Apple’s customers have long prioritized the security, centralization, and convenience that the App Store brings,” Morgan Stanley’s Erik Woodring wrote in a note on Wednesday. So if Apple does open up the iPhone to third-party apps or app stores, there are likely to be security requirements for developers,” a report by CNBC suggested. “Apple has argued that the App Store is important for customer security, because software that Apple hasn’t checked could steal personal data or payment information. And a Morgan Stanley estimate published Wednesday said that in the very unlikely worst-case scenario for Apple, if alternative app stores in Europe resulted in a total loss of App Store sales in the region, it would only dent Apple’s services business by around 4%, its total revenue by roughly 1%, and its earnings per share by 2.5%.Įven if the EU law forces Apple to break the App Store’s hold on distribution, the company could still find a way to take fees from apps distributed in other ways. Of the estimated US$85 billion that the Apple App store has grossed so far this year, spending on iOS apps in the EU came in at about US$6 billion, according to an estimate from Data.ai.ĬOMPLIANCE European hammer of justice to fall on big tech?Īccording to the same estimate, the US store was responsible for about US$29 billion. While Europe spends less on iPhone Apps than America does, as a market for Apple, Europe is by no means insignificant. How will Apple be impacted by the new EU law?Īpple makes a huge amount of profit from its App Store, which takes a cut of up to 30% from digital sales made through any app it distributes. Since Apple generated nearly US$400 billion in worldwide revenue in the fiscal year 2022, it would put such a fine in the US$80 billion range. The law threatens fines of as much as 20% of a company’s annual global revenue for repeated violations. The laws apply to technology companies with market valuations of at least €75 billion (US$80 billion) and a minimum of 45 million monthly users within the EU. Dubbed the Digital Markets Act, the EU law takes effect in the coming months, but companies aren’t required to comply with all of the rules until 2024. ![]() So far, the US has proposed similar legislation, the Open App Markets Act, which is currently being debated in Congress. Should similar laws be passed in other countries, Apple’s project could lay the groundwork for other regions, but for now, the company’s changes are designed to only go into effect in Europe. ![]() Looking back over the years, regulators and software makers have frequently complained that Apple and Google, which run the two biggest mobile app stores, wield too much power as gatekeepers. The move is a response to EU laws which aim to level the playing field for third-party developers and improve the digital lives of consumers. The changes would mean that customers could ultimately download third-party software to their iPhones and iPads without using the company’s App Store, sidestepping Apple’s restrictions and the up-to-30% commission it imposes on payments.
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