Apple announces sweeping changes to apps in Europe

(CNN) — Apple announced sweeping new changes to its app management in Europe on Thursday, including plans to allow third-party app stores on iPhone and iPad for the first time in the company's history and significant cuts to App Store fees.

These unprecedented updates, in response to new European regulations that will take effect in March, reflect some of the most significant changes in Apple's app business since its App Store debuted 15 years ago, the store that forms the foundation of its gated ecosystem. .

For consumers, the change could mean more choices when purchasing and installing apps. For developers, other changes to Apple's terms may give them more flexibility in marketing their products to users.

These measures highlight how European Union policymakers were able to force Apple to change its business practices in the face of complaints from developers, who accused the iPhone maker of anti-competitive or monopolistic behavior.

Under the changes, Apple will allow users to download third-party app stores to their devices from websites outside Apple's ecosystem. Apple said the App Stores will exist as standalone applications on an iOS device, with the ability to install other applications provided by third-party marketplaces.

Apple also said it will significantly reduce the fees it charges for in-app transactions for digital goods and services, reducing them from 30% to 17%, and for developers who qualify for certain discount programs through Apple, from 15% to 10%. .

Currently, about 3% of developers in the EU pay Apple's standard 30% commission, while 9% pay the discounted rate, according to Apple. The remaining 88% pay nothing, according to the company.

Application developers will be able to offer alternative payment methods that do not depend on Apple's own systems, according to the company, and Apple will not charge any fees for this. He added that Apple will also not charge any commission for apps distributed through third-party app stores.

In return, developers who choose to take advantage of the new capabilities and fee structure will pay a new fee of €0.50 per app installation after the first million installs of the year. According to Apple, less than 1% of EU developers will likely have to pay installation fees. Developers who want to continue using Apple's proprietary systems can choose to continue under the company's existing terms and fee structure, according to the company.

EU residents will be able to access expanded features in Apple's next update to iOS, version 17.4, in March, according to the company, and app creators will be able to test the changes starting Thursday.

Differences in Apple's approach in the EU and US

Apple's move to comply with a new EU law, known as the Digital Markets Act (DMA), highlights the stark differences between how the company plans to operate in Europe compared to other parts of the world. Last week, in compliance with a US court order, Apple announced its support for alternative payment methods. But unlike what is happening now in Europe, Apple said it would continue to charge a commission of up to 27%, angering some developers who accused the company of “deceptive” compliance with the court order.

On Thursday, Apple's critics, including the Coalition for App Fairness, a group that includes Epic Games, maker of Fortnite, Spotify, Tile and others, blasted Apple's announcement as a half-measure meant to give the appearance of compliance.

“This plan does not meet the DMA’s goal of increasing competition and fairness in the digital marketplace: it is not fair, reasonable and discriminatory,” said Rick VanMeter, the group’s executive director. “Apple's proposal forces developers to choose (…) either continue with the terrible status quo or choose a new and complex set of terms that are bad for both developers and consumers.”

However, Epic Games – which has spent years in an antitrust battle with Apple in the US and saw Fortnite banned from the App Store in 2020 – said on Thursday that the popular online gaming app will return to iOS in Europe this year. The game will be distributed through Epic Games' new iOS app store, according to a post on the company's X website.

However, Epic Games said: “We will continue to argue in courts and regulators that Apple is violating the law.”

Apple representatives declined to say Thursday whether the changes they are making in response to EU rules could be introduced elsewhere in the world.

They also argued that, in order to comply with EU law, Apple's updates represent a fundamental change to the app ecosystem and, in some cases, may expose users to greater security risks. The company added that it will continue to conduct basic automated and human security reviews of all apps, and owners of third-party app stores will have to meet certain security standards.

But according to the company, apps distributed through third-party app stores will not be subject to the content or quality checks that Apple uses to review its own stores.

Other changes Apple is making in Europe could open up more options for consumers in mobile payments. Apple said iOS 17.4 will allow developers to access the tap-to-pay chip built into iPhones, making it possible to create alternative mobile wallet apps on iOS that can be used for contactless payments at ATMs and kiosk stores.

Changes in browser selection

Meanwhile, updates to the way Apple manages browsers will provide EU users with a new selection screen the first time they open Safari after downloading iOS 17.4, according to Apple. The selection screen will provide a list of alternative browsers, such as Chrome or Firefox, and will provide users the ability to select a default browser other than Safari. This change is intended to respond to long-standing criticism of the tech giants over the ability to use default settings to direct users to their own software.

In addition to the ability to set new defaults for browsers, Apple said EU users will be able to set a third-party app marketplace as the device's default app store, though an Apple App Store will initially be created.

CNN's Claire Duffy contributed to this report.