App developers under the Coalition for App Fairness (CAF) have asked the European Commission to reject Apple’s “sham” compliance with the Digital Markets Act (DMA), noting that the plan has various discrepancies and is a guise to maintain market dominance at the expense of European consumers and developers.
The DMA, which went into force on March 7, is the new competition law in the EU that requires Apple and other designated large tech platforms, known as gatekeepers, to open up their ecosystem to competition. To comply with this law, Apple has started allowing alternative app marketplaces (third-party app stores) and alternative payment systems for iOS users 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.
However, the concessions by Apple come with caveats. For instance, even when developers use alternative payment systems or app stores, they have to pay Apple fees. In some cases, developers end up paying much more to Apple under the new policy. For these reasons, developers like Epic Games, Spotify, and others have asked the European Commission to look into the matter.
What the DMA says vs what Apple has done
The Coalition for App Fairness has shared a provision-by-provision breakdown of the discrepancies between DMA and Apple’s compliance policies:
Definitions for context
- Gatekeeper: The term used by the DMA for designated large online platforms that provide important services to EU consumers and businesses. Apple, Google, Facebook, Meta, Microsoft, Amazon, and TikTok have all been designated as gatekeepers.
- Core platform services: The services provided by the gatekeepers that have to adhere to the DMA obligations. For Apple, the core platform services are iOS, App Store, and Safari.
Communicating directly with users about lower prices outside the app
- What the DMA says: As per Article 5(4) of the DMA: “The gatekeeper shall allow business users, free of charge, to communicate and promote offers, including under different conditions, to end users acquired via its core platform service or through other channels, and to conclude contracts with those end users, regardless of whether, for that purpose, they use the core platform services of the gatekeeper.”
- Apple’s compliance: The Coalition for App Fairness said that Apple does not let developers tell consumers within the app about better deals available outside the app. Users can only find this information outside of the app.
Free access to the gatekeeper’s operating system (iOS)
- What the DMA says: As per Article 6(7): “The gatekeeper shall allow business users and alternative providers of services provided together with, or in support of, core platform services, free of charge, effective interoperability with, and access for interoperability to, the same operating system, hardware or software features, regardless of whether those features are part of the operating system, as are available to, or used by, that gatekeeper when providing such services.”
- Apple’s compliance: While the DMA requires Apple to provide access to iOS free of charge, Apple is imposing a new Core Technology Fee (CTF) of €0.5 for every app downloaded outside the Apple App Store. “Forcing developers to pay a fee when Apple isn’t providing anything besides iOS access is illegal and will discourage developers from distributing their app anywhere outside the Apple App Store,” CAF claimed.
Choice of payment system when making in-app purchases
- What the DMA says: As per article Article 5(7): “The gatekeeper shall not require end users to use, or business users to use, to offer, or to interoperate with, an identification service, a web browser engine or a payment service, or technical services that support the provision of payment services, such as payment systems for in-app purchases, of that gatekeeper in the context of services provided by the business users using that gatekeeper’s core platform services.”
- Apple’s compliance: Apple imposes multiple fees on developers that offer an alternative payment option “making it financially unviable to offer an alternative payment option.” Additionally, Apple “uses scary warnings and excessive friction that make it harder to use a third-party payment option instead of Apple’s own payment system,” CAF pointed out.
Choice of where consumers get their apps from
- What the DMA says: As per Article 6(4): “The gatekeeper shall allow and technically enable the installation and effective use of third-party software applications or software application stores using, or interoperating with, its operating system and allow those software applications or software application stores to be accessed by means other than the relevant core platform services of that gatekeeper.”
- Apple’s compliance: Apple does not allow consumers to download apps directly from the developers’ websites. They have to either download from the official App Store or an authorised third-party app store. Apple also sets “unfair restrictions” on which third-party app stores are allowed. “With no direct downloads, and few app stores, consumers will not have a real choice of where to get their apps,” CAF complained. Additionally, since developers have to pay CTF to use third-party app stores, there is a significant disincentive for highly popular apps, such as Facebook, WhatsApp, Uber, and Amazon from listing themselves on alternative app stores.
Gatekeepers should be fair, reasonable and non-discriminatory
- What the DMA says: As per Article 6(12): “The gatekeeper shall apply fair, reasonable, and non-discriminatory general conditions of access for business users to its software application stores, online search engines and online social networking services listed in the designation decision pursuant to Article 3(9).”
- Apple’s compliance: CAF explained that Apple imposes commission only on apps selling digital goods and services despite all apps using the same app store services. All apps should be subject to the same commissions (or lack of), the Coalition argued.
Apple’s rocky start with DMA
- Epic Games: Apple courted controversy at the very beginning of its compliance with the DMA by terminating the developer account of Fortnite-maker Epic Games. In a letter sent to Epic Games, Apple called the company “verifiably untrustworthy” and cited the numerous comments made by Epic CEO Tim Sweeney criticising Apple’s compliance with the EU’s Digital Markets Act (DMA). However, following sharp words and swift intervention from the European Commission, Apple reinstated the developer account.
- Web apps: Apple also had to walk back on its plans to disable progressive web applications (PWAs) after developers protested the move. Web apps are websites that look and function like mobile apps, having a home screen icon, notifications, and local storage. Apple initially said that web apps would not be supported because it would “require building an entirely new integration architecture that does not currently exist in iOS.” You can read more about this issue here.
Also Read
- Explained: Apple’s New App Store Policy In The EU And Why Some Developers Are Unhappy With It
- All Changes That Apple Has Made To App Store Policy Around The World Due To Regulatory Pressure
- Europe Fines Apple €1.8 Billion In Spotify Antitrust Probe, Orders It To Remove Anti-Steering Provisions
- Apple Back Tracks On Its Decision To Disable Progressive Web Apps In The EU
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