Apple has unveiled a series of upcoming updates to iOS in the European Union, which will include a new fee for developers. These changes are part of the iPhone maker’s efforts to comply with the Digital Markets Act (DMA), the bloc’s competition reform initiative.

In September, the EU classified Apple as one of six “gatekeepers” under the DMA, identifying the iOS App Store and Safari browser as “core platform services.” The regulation places a set of responsibilities and limitations on gatekeepers. Apple is being compelled to accept sideloading of apps, along with other alterations. The gatekeepers must comply with the DMA by March 7, which is the deadline.

Today, Apple announced the availability of iOS 17.4 in beta. According to Apple, this update will assist developers in getting ready for the upcoming changes to its mobile platform. To meet the EU’s compliance deadline, these changes will go into effect next month.

During a background briefing with journalists prior to the beta launch, Apple revealed that it has dedicated significant time and effort to developing its solution in order to meet the requirements of the DMA. However, it also cautioned that certain modifications may introduce additional vulnerabilities for users. This echoes a well-established concern about sideloading, as it has the potential to compromise the security and privacy of iOS users.

Apple has announced upcoming changes for iOS developers who distribute apps in the European Economic Area (EEA). These changes include:

• Exciting developments have emerged in the realm of distributing iOS apps, with the introduction of fresh APIs and tools that empower developers to make their iOS apps available for download from various alternative app marketplaces.
• Introducing a cutting-edge framework and APIs that empower developers to build their own app marketplaces. With this innovative solution, marketplace developers can effortlessly install apps and seamlessly handle updates on behalf of other developers, all within their dedicated marketplace app.
• Introducing new frameworks and APIs that empower developers to utilize different browser engines is expanding the possibilities for browser apps and apps with in-app browsing experiences beyond just WebKit.
• A form is available for developers to submit requests for interoperability with iPhone and iOS hardware and software features.

There was new information last week regarding an offer that Apple made to the EU in an effort to end an antitrust investigation involving Apple Pay. Today, it was indicated that the proposed changes to contactless payments on iOS are in line with industry standards. These changes include new APIs that enable developers to utilize NFC technology in their banking and wallet apps across the EEA. Additionally, users will have the ability to choose a third-party contactless payment app or an alternative app marketplace as their default option.

As with the various changes Apple is introducing today, it will be the responsibility of the European Commission to evaluate their compliance with the DMA and determine if they meet the legal requirements.

If EU regulators determine that Apple’s modifications do not align with the DMA, it may result in substantial fines amounting to 10% of their global annual turnover and compel Apple to reconsider their approach.

Introducing fresh business terminology and an additional fee for essential technology.

Alongside the various DMA-focused changes that developers will have access to, Apple is also rolling out new business terms in Europe. These terms include the implementation of a new fee known as the “Core Technology Fee.”

This appears to be designed to guarantee that Apple can still receive a portion of the revenue in certain situations, even if developers choose to go beyond its controlled environment. This could include distributing their apps through other app stores or directing users to their own websites to make payments for additional content.

According to Apple, iOS apps that are downloaded from the App Store or another app marketplace will incur a fee of €0.50 for each initial installation per year if the number of installations exceeds 1 million.

Developers who wish to utilize the newly announced features, such as the option to distribute their apps through different app stores, are required to agree to the updated business terms.

“The new business terms for apps in the EU are crucial to meet the DMA’s requirements for alternative distribution and payment processing,” stated Apple in a press release. Apple’s fee structure is designed to acknowledge the various ways in which they contribute to the success of developers’ businesses. This includes providing distribution and discovery opportunities on the App Store, secure payment processing, a trusted mobile platform, and a range of tools and technology to facilitate the creation and sharing of innovative apps with users worldwide.

As part of the new business terms, Apple is adjusting the percentage it receives from digital purchases made on iOS apps in its App Store. This adjustment applies to transactions involving digital goods and services, with a reduced cut of 17%. Additionally, for the majority of developers and subscriptions after their first year, Apple will only take a 10% share.

Apple will charge a payment processing fee of an extra 3% for iOS apps on the App Store that wish to utilize their own payment technology.

However, developers have the option to utilize a different payment service provider within their app or direct users to their website for payment processing without incurring any extra charges from Apple.

In addition, Apple announced that developers will have the option to continue with its current business terms. This means that they can still collect a commission on in-app purchases made through apps on the App Store, with the standard rate being 30% (or 15% for small businesses).

Developers can choose their own terms and still have access to the App Store’s payment processing technology and distribution platform in the EU, according to Apple.

According to the new business terms, the tech giant predicts that the majority of developers will either decrease or keep the fees they owe.

Additionally, it indicates that a very small percentage of developers will be required to pay the Core Technology Fee for their EU apps. This fee is specifically aimed at apps that have achieved significant popularity, such as being installed on millions of iOS devices.

Apple is defending the implementation of the new fee by stating that it accurately represents the worth of its technology platform and services, which are separate from the App Store’s capabilities and distribution.

Although the DMA requires app stores to allow sideloading, it does not enforce any particular business models on them. Yet, it is uncertain if Apple’s strategic adjustments to its business terms in the EU, along with the options it is offering to developers, will meet the approval of regulators.

According to Article 6(12) of the DMA:

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).

In order to avoid violating the DMA, Apple will have to convincingly argue that the framework it has developed is “equitable, rational, and unbiased.”

As part of its updates, Apple is introducing several new features to its platform. These features include notarization for iOS apps, which involves a thorough review process to ensure platform integrity and user protection. It will include both automated checks and human reviews. Apple is also implementing app installation sheets, which provide users with concise descriptions and functionality overviews before downloading an app. Additionally, Apple will require marketplace developers to meet ongoing requirements to safeguard users and developers. Lastly, Apple is enhancing its malware protections to prevent iOS apps from launching if they are found to contain malware after installation.

During the last press event, Apple emphasized that the modifications mandated by the EU would introduce whole new vulnerabilities for iOS users.

The business emphasized the security concern of allowing iOS applications to install other apps on the user’s device, which Apple refers to as “marketplace apps.” This is considered a typical method for malware attacks. While its reps said that there has never been a prevalent consumer malware assault on iOS up until now,.

Developers who agree to Apple’s new business rules will have the opportunity to create alternative app stores, also known as marketplace applications. However, they will still be required to go through Apple’s app review process and fulfill certain criteria that aim to safeguard consumers and developers.

Additional modifications are forthcoming, addressing various DMA requirements regarding Apple’s App Store and Safari browser. Some of these changes appear to be aimed at prompting iOS users to exercise caution before choosing any non-Apple alternatives. One such change involves the introduction of a choice screen, which will allow iOS users to designate their default browser. This screen will present a range of competing browsers alongside Apple’s Safari browser. Furthermore, developers will now have the capability to offer browsers that are not reliant on the WebKit browser engine. Apple has introduced new labels on the App Store product pages to notify users when an app they are downloading uses a different payment processing system. Additionally, in-app disclosure sheets will inform users when they are no longer making transactions with Apple and when a developer is directing them to use an alternative payment processor. Apple has introduced new procedures for reviewing apps. These procedures aim to ensure that developers provide accurate information about transactions involving alternative payment processors. Additionally, Apple has expanded the data portability feature on its Data & Privacy site. This allows users in the European Union to access and export new data about their App Store usage to an authorized third party.

One strategy Apple may use to encourage customers to continue using its own payment technology for third-party applications is by notifying iOS users when they are no longer doing transactions with Apple. However, Apple may argue that this is only an “equitable and rational” cautionary message sent to its customers when they go outside its controlled environment.

The DMA grants gatekeepers the authority to implement “strictly necessary and proportionate” actions to safeguard the integrity of the hardware, software, or operating systems they offer. This includes protecting against potential risks posed by third-party apps and stores as well as complying with the interoperability requirements mandated by the DMA. It’s crucial to remember that the gatekeeper must justify any measures taken.

Apple has announced another update that would allow developers to provide a streaming game app store.

In response to Apple’s action, Epic Games, which had previously filed a lawsuit against the tech giant in the United States on the terms of the App Store, expressed their disapproval. They referred to their offering in the European Union as “malicious compliance” and criticized it for including excessive and unnecessary costs.