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Unpacking Apple’s Sideloading Controversy in the European Union

Controversy in the European Union: In a significant shift, Apple has announced its decision to open up the iPhone to sideloading and alternative app stores, specifically in the European Union (EU). The move is part of Apple’s response to comply with the EU’s new Digital Markets Act (DMA), reflecting the tech giant’s effort to address regulatory concerns. While this development may appear to be a concession to regulatory pressure, it has triggered mixed reactions from developers.

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Creator: Indranil Aditya | Credit: Bloomberg Copyright: © 2023 Bloomberg Finance LP

Epic Games CEO’s Critique: “Hot Garbage”

Epic Games CEO Tim Sweeney, known for his criticism of Apple’s policies, termed the changes as “hot garbage.” Despite this critique, Epic Games announced its intention to launch its app store, signalling a complex response from developers to Apple’s updated guidelines.

Commission Reduction vs. Core Technology Fee Challenge

While Apple’s new rules propose a reduction in the commission for developers, a closer look reveals a potential drawback. Apps with over 1 million downloads would incur a new €0.50 (~54 cents USD) Core Technology Fee. This fee structure could significantly impact larger developers, as illustrated by Nikita Bier, founder of the Gas app.

A Financial Balancing Act for Developers

Nikita Bier’s calculations using Apple’s fee calculator demonstrate the substantial impact of the Core Technology Fee. An app with $10 million in sales and 10 million downloads could face a monthly charge of $515,942. This adds up to approximately $6.2 million paid to Apple annually, compared to the existing terms of about $3 million per year.

Critics Point to a “Poison Pill” for Alternative App Stores

Developers and industry experts criticize Apple’s requirement for a €1,000,000 letter of credit from an “A-rated” financial institution to establish an alternative app store in the EU. David Heinemeier Hansson, creator of Ruby on Rails, sees this as a “poison pill” designed to impede the growth of second-party app stores.

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Creator: David Paul Morris
|Credit: Bloomberg
Copyright: © 2020 Bloomberg Finance LP

Coalition for App Fairness Decries Lack of Fairness

The Coalition for App Fairness, a nonprofit organisation led by Epic Games, expressed dissatisfaction with Apple’s plan. Executive director Rick VanMeter stated that the changes do not align with the DMA’s goal to foster competition and fairness in the digital market. He highlighted the dilemma faced by developers, forced to choose between two perceived anticompetitive options.

Developer Skepticism Persists

Despite some developers seeing a reduction in commissions positively, scepticism persists. Paul Haddad, co-founder of Tapbots, acknowledges the benefit for developers but questions the viability of Apple’s Core Technology Fee, especially for freemium apps and those offering demos.

Apple’s Control Amidst Changes

Developer and author Maximiliano Firtman views Apple’s new policy as an attempt to retain control over developers. Firtman notes that Apple will still exert influence through its iOS notarization feature, maintaining a level of control over alternative app stores.

AltStore’s Optimistic Perspective

While scepticism lingers, AltStore, an app store facilitating sideloading, plans to launch in the EU officially. AltStore developer Riley Testut views the changes as positive, unlocking possibilities for entirely new classes of apps on iOS.

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Creator: NurPhoto
|Credit: NurPhoto via Getty Images
Copyright: Costfoto/NurPhoto

Controversy in the European Union: Awaiting EU Commission’s Verdict

As developers weigh the pros and cons of Apple’s new rules, the EU Commission will play a crucial role in evaluating the company’s compliance with the DMA. Commissioner Thierry Breton has emphasized the importance of proposed solutions meeting expectations, indicating potential regulatory actions if deemed necessary.

In the coming days, the tech industry will closely monitor how developers and alternative app stores navigate Apple’s altered landscape, setting the stage for potential shifts in the mobile app ecosystem. The EU’s response, starting from March 7th when the DMA goes into effect, will provide insights into the regulatory stance on Apple’s attempts to strike a balance between openness and control.

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