The Apple App Store is under immense regulatory and legal scrutiny around the world: the EU, the US, the UK, India, China, Russia, South Korea, and Japan, and the list continues to grow. Because of this, the company has slowly been giving up its control over what was once a tightly controlled marketplace. But Apple is not doing it without a fight. All the concessions it has made so far come with strings attached and developers and regulators are not happy with it. Here’s a round-up of all the major changes the company has made to the App Store in recent years:
1. Alternative app stores and payment options in the EU: In January 2024, Apple announced its biggest change to the App Store since its inception, allowing alternative app marketplaces (third-party app stores) and payment systems in the EU. Until this point, iOS apps could only be downloaded from the official App Store and these apps could only process purchases using Apple’s in-app purchase system. Apple had to open up its ecosystem to comply with the Digital Markets Act, which goes into effect in March 2024. However, this policy change comes with many caveats. For instance, even when developers use alternative payment systems to process purchases, they have to pay Apple a hefty commission. In some cases, developers end up paying much more to Apple under the new policy. For these reasons, developers have criticised Apple and have asked EU regulators to look into the compliance. Read more.
2. Linking out to external websites for in-app purchases in the US: The curtains on the Epic vs Apple lawsuit came to a close (or at least appeared to) in January 2024 when the US Supreme Court upheld the lower court’s ruling, allowing US-based developers on the App Store to inform and direct users to external websites to make purchases rather than require them to pay through the in-app purchase system, which charges developers a 30 percent commission. However, Apple has put in place various restrictions including showing a warning screen to users and charging developers a 27 percent commission even when users pay outside the app. Epic now wants to challenge this compliance. Read more.
3. Alternative payment systems in South Korea: South Korea in September 2021 became the first country to introduce regulations forcing Google and Apple to open their app stores to alternative payment systems, but developers soon complained that the two companies were finding ways around the regulations by still charging high commissions and engaging in other unfair practices. In response, KCC launched an investigation into Google and Apple and in October 2023 said that it plans to impose corrective measures and penalties on Google and Apple.
4. Linking to external websites for “reader apps” in Japan: In September 2021, Apple conceded to settle an investigation by Japan’s Fair Trade Commission into the Apple App Store. The concession allows developers of “reader apps” like Netflix and Spotify to include an in-app link to their website for users to set up or manage an account. Read more.
5. Allowing alternative payment systems for dating apps in the Netherlands: Apple in January 2022 said that it will allow dating apps in the Netherlands to offer alternative payment options to users in compliance with an order issued by the country’s Authority for Consumers and Markets (ACM). However, the ACM found Apple’s implementation of its order unsatisfactory and imposed multiple fines. But with the new rules under DMA (outlined in point 1 above), Apple is now expected to allow all apps in the EU to offer alternative payment systems, so the previous order by ACM might be redundant.
6. Apple’s lower commissions for small businesses: The default commission charge by Apple is 30 percent of all in-app purchases of digital goods and services. However, in November 2021, after coming under fire from multiple developers, Apple reduced commissions to 15 percent for developers that make less than $1 million per year. Read more.
7. Only government-approved apps in China’s App Store: Apple in October 2023 updated its App Store policy to state that only apps with the required licenses from the Chinese government will be made available on the App Store in mainland China. This is not a developer-focused change but is nevertheless important because it sets precedence for other countries to require Apple to do the same. Read more.
Countries that are still scrutinizing the App Store will likely require changes to its policy:
- India: The Competition Commission of India (CCI) in December 2021 ordered a detailed investigation into Apple after noting that there is prima facie evidence of the company abusing its dominance in the market for the distribution of apps for iOS devices. If the verdict of this goes anything like the verdict against Google Play, Apple could be expected to make major changes to its policies. Read more.
- US: In the US, lawmakers are considering a new bill called the Open App Markets Act that proposes making it mandatory for operating systems to allow third-party app stores and alternative payment systems. Read More.
- UK: In July 2022, the UK’s Competition and Markets Authority (CMA) published its report on the mobile ecosystems market noting that Apple and Google have a stranglehold over key gateways. It specifically pointed out Apple’s restrictions on third-party options of developers, the mandatory use of the in-app purchase system, the high commissions, the lack of access to all hardware functionality, etc. The regulatory recommended ex-ante regulations and other specific measures to safeguard developers. The UK is currently working on a DMA-style law, which could implement these recommendations. Read more.
- Japan: Japan is expected to introduce new rules that will force Apple and Google to open up their smartphone operating systems to app downloads from external sources as well as third-party billing systems for in-app purchases. Read More.
- Russia: Russia in October 2021 launched an antitrust investigation into Apple’s App Store for not allowing developers to link to third-party payment systems. Read more.
- China: China’s Supreme Court in September 2021 dismissed Apple’s plea and ruled that an antitrust lawsuit filed by a consumer against the company’s China entity could proceed. Read more.
- South Africa: The Competition Commission of South Africa in July 2022 released a report on its digital markets inquiry to study competition concerns in e-commerce, app stores, travel and accommodation aggregators, food delivery platforms, and online classifieds. The report recommended putting an end to anti-steering provisions, among other things. Read more.
- Australia: The Australian Competition and Consumer Commission (ACCC) in September 2020 launched an inquiry into competition in the mobile app stores market. In April 2021, the ACCC published a report based on its findings noting that Apple’s App Store and Google’s Play Store have significant market power in the distribution of mobile apps in Australia, and measures are needed to address this. Read more.
- Deep Dive: What Issues Do App Developers Face And How Should App Stores Be Regulated?
- Explained: Apple’s New App Store Policy In The EU And Why Some Developers Are Unhappy With It
- India Orders Google Play Store To Allow Developers To Use Third Party Billing Systems, Not Impose Disproportionate Fees, And More
STAY ON TOP OF TECH NEWS: Our daily newsletter with the top story of the day from MediaNama, delivered to your inbox before 9 AM. Click here to sign up today!