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Setapp plans to launch alternative app store for iOS in the European Union

Digital Markets Act in the EU requires Apple (and other large platforms that are designated as gatekeepers) to allow users to install apps from outside the official App Store

A company called Setapp is planning on launching an alternative app store for iOS users in the European Union (EU) that will compete with the Apple App Store.

Setapp is banking on the recently enacted Digital Markets Act (DMA) in the EU, which requires Apple (and other large platforms that are designated as gatekeepers) to allow users to install apps from outside the official App Store, such as through third-party app stores. The Act will start applying from March 2024, and reports suggest that Apple is working on complying with the regulations in the upcoming iOS 17.

Why does this matter: Given the regulatory pressure on Apple from across the globe, this is just the beginning of the world of alternative app stores for iOS. But whether or not these app stores will overtake the popularity of the Apple App Store remains a big question. Case in point: Google has been allowing third-party app stores on Android for a while now, but Google Play remains the go-to option for users, as well as developers. With iOS, familiarity and trust with the App Store are even more ingrained among iPhone users. This raises the question of whether allowing third-party app stores and sideloading will practically benefit developers or will only appease regulators.

How much commission will Setapp charge: App developers will get up to 90 percent revenue share from user fees every month, the company said, but the criteria for getting the full 90% is not clear yet. For comparison, Apple takes between 15 to 30 percent in commission, giving developers 70 to 85 per cent of the revenue.

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Could we see such third-party app stores in India? The Competition Commission of India (CCI) is currently investigating the Apple App Store for anti-competitive practices, including the restriction of downloads only through the official App Store. If the CCI’s final order is anything similar to the Google Play Store order, we can expect Apple to be forced to allow third-party app stores in India as well.

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