The App Store, Apple’s mobile app store, is the real jewel in the giant’s crown. The store allows you to buy and download apps or games, a Apple charges high fees (up to 27% per transaction) on every payment. However, the company may lose a lot of this revenue because in the EU it will have to allow third-party app stores and many in-app promotions.
Indeed, Apple has approved a rival mobile store developed by Epic Games, also the creator of the popular game Fortnite. I agreed to reduce the summer prices on the Spotify app.Previously, the giant company did not allow the installation of a store other than the App Store, and it also prohibited the provision of various promotions, because its profits from commissions would then be unsatisfactory.
The European Commission did not spare Apple
In June, the European Commission accused Apple of violating the Digital Markets Act 2022, which gives regulators the power to force tech giants to change their business practices.
Tim Sweeney, CEO of Epic Games Already in 2020, he filed a lawsuit. Antitrust Authority Against Apple for Imposing Commissions on Every Fortnite TransactionIt was worth millions of dollars.
Apple says it complies with the law in Europe and does not operate as a monopoly. So why does it charge such high commissions on transactions? It claims that, on the one hand, it forces itself to pay for ensuring the security of the processed data, and on the other It shows that it is a fair exchange for access to billions of iOS ecosystem users.
In the past, some companies, including Epic Games, have tried to circumvent Apple’s commission systems by offering their own ways to accept payments. However, Apple did not approve of such practices. For example, it has removed such apps from its store.
Now the company run by Tim Cook won’t be able to do that. The Epic Games Store, which initially offered Epic’s first-party games like Fortnite, Rocket League Sideswipe, and Fall Guys, is now available, as well as You will be able to put other games there. This means that many game developers may quickly want to migrate their apps from the App Store. To the Epic Store, because the latter will charge commissions, but they are much lower – specifically 12%. of sales.
Apple, which wants to keep many apps in-house, will have to cut the commission. The company will lose the opportunity to eliminate competitors from its ecosystem.
At the same time, the giant will abide by the law, but it does not intend to make it easier for competitors to get customers. As Sweeney noted, Apple has created a “scare screen,” a message that warns the user against installing a store other than the App Store, indicating that such an app may not be properly secured and may not be compatible with the iPhone or iPad operating system. To download and finally install the third-party store, you have to complete about 15 steps, including changing system settings.
– Apple has no problem creating messages that are easy, intuitive, and natural. The fact that they created him in such a horrible way only shows their malicious intentions – Sweeney commented.
Read also: Your privacy could end up in the wrong hands. In return, you get peace of mind.
Apple won’t give up its shares easily
Of course, Apple won’t give up its shares easily, with billions of dollars at stake. The company announced this month that apps in Europe will be able to provide links to make payments without commission. However, there is a “but.” The giant company will charge a 5 percent “activation fee” on sales and a 20 percent “store fee.”In total, fees may be up to 25%. Commissions for some app developers. They will be named differently.
The iPhone manufacturer is certainly going to fight in every way possible so as not to lose revenue. Especially since they are there It’s very easy money for him – he collects commissions from apps that he didn’t create or develop himself.
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By the end of the year, Apple will also allow users to remove some of the default apps installed on their phones or tablets. What will we be able to remove? In addition to the App Store, it will include the Safari web browser, as well as apps like Photos, Camera, and Messages.
“By the end of the year, we will be rolling out changes to the browser selection screen, default apps, and the ability to delete iOS and iPadOS apps for users in the EU,” Apple quietly announced in a developer update. “These updates are the result of our ongoing dialogue with the European Commission on compliance with the Digital Markets Act requirements in these areas.”
All of these apps are very important to Apple, especially the App Store and Safari. While the store charges commissions on apps and transactions, The browser also makes billions of dollars.How is this possible? Google pays Apple about $18 to $20 billion annually to be the default search engine on Apple mobile devices. Many users use Google on Apple devices, and Google shares commissions from ads displayed with the giant.
Read also: But cookies stay. Google doesn’t want us to have more privacy.
Some costs will be borne by the developers.
Apple will also look elsewhere for money. If developers opt out of the App Store to avoid paying high commissions, Apple will charge what it calls a “basic technology fee” — a fee that Only for use of Apple technology and ability to run on iOS systemWe don’t know the prices, but they could run into the hundreds of thousands of dollars for some applications.
Apple could set up its policies this way. Offering apps outside the App Store would be possible and legal, but it’s simply not profitable.Then either the company decides not to make its app available on iOS, losing access to billions of potential customers, or it will do so under the old rules, paying Apple a high commission in the App Store.
The EU is already looking into this issue. At the moment, it seems that it will be impossible to run a profitable mobile business through a third-party iOS app store.
Author: Grzegorz Kobra, Business Insider Polska journalist
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