Apple is undergoing a historic overhaul of its iOS, Safari, and App Store systems in the European Union as a response to regulators planning to impose strict new antitrust regulations. The company announced on Thursday that the overhaul will allow customers to download software from outside the App Store for the first time. They will also have the option to use alternative payment systems and choose their default web browser, addressing the frequent complaints from developers and lawmakers and providing a solution to these issues.
The major changes, set to take effect in March with the iOS 17.4 operating system, are a direct response to the EU’s new Digital Markets Act, which imposes stringent restrictions on the largest technology companies and increases the powers of the EU Commission as the region’s antitrust authority. However, Apple has challenged these regulations in EU courts. This announcement is a significant moment for both Apple and the EU. The closed App Store model was a fundamental feature of the technology designed to ensure security, user protection, and increased profits. For the EU, the changes Apple is implementing represent the biggest challenge yet to whether it can enforce substantial reforms in the operations of the world’s largest tech companies. This announcement has disoriented investors, causing a drop in stock prices after previous increases. At 2:08 PM in New York, the stock dropped by less than 1% to $193.83.
Apple executives warned on Thursday that these changes pose a threat to the company’s longstanding emphasis on user security. “Apple needs to create technology that allows apps to install other apps, and there is inherent risk in that process,” said Phil Schiller, Apple’s long-time marketing chief who now oversees the App Store, in an interview on Thursday. “This can be a big risk to privacy, security, and device integrity. That’s why Apple is now introducing technologies and policies aimed at minimizing this risk.” Schiller added that in a world election year, there may be “new threats to users” related to downloading apps from alternative app stores that do not meet Apple’s security standards. The company will not extend its content guidelines to the market of third-party websites.
As part of the overhaul, developers will be able to create applications for contactless payments using the iPhone’s payment chip, as well as browsers with third-party rendering engines and expanded game streaming services. They will also have the ability to request increased access to iPhone hardware and software features. The new approach means abandoning the current 30% commission rate that Apple has been charging developers since the launch of the App Store in 2008. Now they will have to pay the company a 17% commission on app sales, and after the first year, the rate will drop to 10% for most developers and subscriptions. The company is not changing the commission structure outside of the EU. However, software will incur new costs. The company has introduced two additional fees: a 3% payment processing fee for apps that use Apple’s in-app purchase system and a €0.50 fee for app installations, through the Apple Store or third-party stores, for software installed over a million times in a 12-month period. The company stated that over 99% of developers in the EU will see a reduction or the same level of payment to Apple, with less than 1% having to pay for app installations. Transferring apps sold outside the App Store will not require any commission other than the €0.50 fee.
This change may harm revenue from Apple’s services, which have been a key area of growth for the tech giant in recent years. Currently, this category accounts for over 20% of the company’s sales, compared to less than 10% ten years ago. The in-app purchase system will not apply to software downloaded outside the App Store, a process known as “sideloading.” If developers distribute their software in this way, the only fee to Apple will be €0.50. However, apps still need to be notarized and undergo Apple’s security threat review process, the company said. Additional adjustments include new tools for third-party developers, enabling them to create their own app download stores and web browsers without using WebKit, the standard Apple has used since the inception of the App Store. Third-party app stores can only be installed from a developer’s website. Many software providers have already announced their plans to launch their own stores to take advantage of these changes. For the first time, banks and other financial services will be able to compete with Apple Pay on the iPhone and create apps for contactless payments. Apple customers will have the option to set a third-party payment app or app store as their default choice in the settings. In another concession, users will be prompted to select a default web browser after the initial launch of Safari on iOS 17.4. Bloomberg News reported on Apple’s plans in December 2022.
Apple is also responding to long-standing complaints by allowing developers like Microsoft Corp. and Nvidia Corp. to create apps that enable streaming an unlimited number of games within a single app. This change will be available worldwide.
FAQ Section Regarding Apple’s Changes in iOS, Safari, and the App Store in the EU:
1. Why is Apple introducing changes in iOS, Safari, and the App Store?
Apple is making these changes in response to new antitrust regulations implemented by the European Union. It aims to comply with regulations that impose strict limitations on the largest tech companies.
2. What changes will be introduced in iOS 17.4?
In the iOS 17.4 operating system, changes such as the ability to download software from outside the App Store, use alternative payment systems, and choose the default web browser will be implemented.
3. Has Apple filed a complaint regarding the new regulations?
Yes, Apple has challenged the newly introduced regulations in EU courts.
4. What will be the consequences of these changes for users?
Users will be able to download software from outside the App Store, use alternative payment systems, and choose the default web browser.
5. What security risks does Apple see for users?
Apple believes that downloading apps from outside the App Store can pose risks to privacy, security, and device integrity.
6. What additional changes will be introduced for developers?
Developers will be able to create applications for contactless payments, use third-party web browsers, and request increased access to iPhone hardware and software features.
7. What are the new commission rates for developers?
Developers will have to pay a 17% commission to the company on app sales
The source of the article is from the blog motopaddock.nl