Apple Inc is preparing to allow alternative app stores on its iPhones and iPads, part of a wider overhaul aimed at complying with stricter EU requirements in 2024.
Apple Inc is preparing to allow alternative app stores on its iPhones and iPads, part of a wider overhaul aimed at complying with stricter EU requirements in 2024.
Software engineering and service staff are engaged in a major push to open up key elements of Apple's platform, according to people familiar with the effort. As part of the changes, customers can finally download third-party software to their iPhones and iPads without using the company's App Store, bypassing Apple's restrictions and commissions of up to 30% charged on payments.
The moves - a reversal of long-standing policies - are a response to EU laws aimed at leveling the playing field for third-party developers and improving the digital lives of consumers. For years, regulators and software makers have complained that Apple and Google, which run the two biggest mobile app stores, wield too much power as gatekeepers.
If similar laws are passed in additional countries, Apple's project could lay the groundwork for other regions, according to the people, who asked not to be identified because the work is private. But the company's changes are designed to take effect in Europe initially.
Still, the news boosted shares of companies that offer dating services and other apps. Match Group Inc jumped 10% and Bumble Inc jumped as much as 8.6% -- a sign investors think the companies may be getting a break from Apple's commissions. Spotify Technology SA, the audio streaming service, climbed as much as 9.7%. Meanwhile, shares of Apple were little changed.
A spokeswoman for the Cupertino, California-based company declined to comment on the upcoming changes.
Major new European legislation, called the Digital Markets Act, takes effect in the coming months, but companies are not required to comply with all the rules until 2024. Government officials in the US and other countries have pushed for similar laws but haven't yet reached the European Union.
The act requires tech companies to allow installation of third-party apps and allow users to easily change default settings. The rules demand that messaging services work together and that outside developers have equal access to core features within apps and services.
The laws apply to technology companies with a market valuation of at least €75 billion ($80 billion) and at least 45 million monthly users within the EU.
The ongoing changes within Apple are being led by Andreas Vanderkerk, the longtime vice president of software engineering who reports to Craig Federighi, the company's top software executive. Jeff Robin — Apple's top engineering manager for its services who reports to Eddy Cue, head of services — is also involved.
Apple is committing a significant amount of resources to a company-wide effort. This hasn't been a popular initiative within Apple, given that the company has spent years reducing the need for "sideloading" — the process of installing software without using the official App Store. In lobbying against the new European laws, Apple has argued that sideloading could put insecure apps on consumers' devices and reduce privacy.
According to the people, some of the engineers working on the plan also see it as a distraction from the normal day-to-day development of future facilities. The company is aiming to roll out the changes as part of next year's iOS 17 update, which will be in line with the requirements.
Epic Games Inc., the maker of the hit game Fortnite, has entered into a legal battle with Apple over App Store fees. After Epic sought to circumvent the commission with Fortnite, Apple removed the game from its store. In the ensuing battle, Epic accused Apple of using monopolistic practices, but a US court found that the iPhone maker did not violate federal antitrust laws.
To help protect against vulnerable apps, Apple is discussing the idea of mandating certain security requirements even if software is distributed outside its store. Such apps may also need to be verified by Apple – a process that may incur fees. Within the App Store, Apple takes a 15% to 30% cut of the revenue.
Apple hasn't made a final decision on whether or not to comply with a component of the Digital Markets Act that allows developers to install third-party payment systems within their apps. It would let users sign up for travel app subscriptions, for example, or buy in-app content from a game maker -- without involving Apple.
As part of an agreement with the Japanese government, the company already owns some media and cloud apps.
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