Apple's reluctant, punitive compliance with regulators will burn its political and developer goodwill | TechCrunch

Nearly a week after Apple announced big changes to the App Store because of the European Union’s Digital Markets Act (DMA) rules, the company said that the market represents 7% of its global App Store revenues.

The company’s chief financial officer Luca Maestri said that the monetary impact of these changes will depend on choices made by developers to adopt different systems.

“A lot will depend on the choices that will be made. Just to keep it in context, the changes applied to the EU market, which represents roughly 7% of our global app store revenue,” he said in reply to an analyst’s question.

Because of DMA, Apple has to allow alternative app stores and let developers use third-party payment processors. The company plans to charge a core tech fee if an app crosses a million annual downloads across different app stores.

Amid these changes, Apple noted a record quarter for App Store revenues. The company’s overall services revenue was $23.1 billion with an 11% jump year-on-year.

Apple continued its narrative of defending the App Store and its commission ecosystem by saying that it provides the best privacy and security. CEO Tim Cook emphasized that the company will fall short of providing the best experience to users because of these changes.

“If you think about what we’ve done over the years is, we’ve really majored on privacy, security and usability. And we’ve tried our best to get as close to the past in terms of the things that are — that people love about our ecosystem as we can, but we are going to fall short of providing the maximum amount that we could supply, because we need to comply with the regulation,” he said.

In the EU, Apple also had to open up the browser ecosystem by allowing other browsers to use their own engine instead of WebKit. When users start their iPhones after updating to iOS 17.4, the company will show a splash screen to let them pick a default browser.

Apple is seemingly exploring more avenues to increase App Store revenue. The company will allow streaming game stores for cloud gaming services to be distributed through the App Store globally. Plus, it is extending the support for in-app purchase systems to mini-games, mini-apps, plug-ins and chatbots. So for instance, Netflix could potentially sell mini-games directly through the app. And OpenAI can have a mechanism for subscribing to paid GPTs.

Industry reaction to Apple’s changes has been harsh. Spotify called Apple’s DMA plan “extortion” while Epic Games CEO described it as “malicious compliance” which is full of “junk fees.” On Thursday, Meta CEO Mark Zuckerberg joined the choir during the company’s earnings call and said Apple’s DMA rules were “so onerous” that he would be surprised if developers opted in. As The Verge reported, several developers have pointed out that if developers agree to the new conditions, they would have to pay a substantial fee.

Coalition for App Fairness, an industry group with members like Epic Games, Spotify, Tile, Basecamp, and Deezer, called Apple’s changes a “non-compliance plan.”

“Apple clearly has no intention to comply with the DMA. Apple is introducing new fees on direct downloads and payments they do nothing to process, which violates the law. This plan does not achieve the DMA’s goal to increase competition and fairness in the digital market – it is not fair, reasonable, nor non-discriminatory,” executive director of CAF Rick VanMeter said.

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