The Digital Market Act (DMA) will go into effect in March in the EU. Among other things, the law wants to prevent anti-competitive practices from gatekeepers and give consumers more options. The law will also force Apple to allow developers to create and offer new apps including a different store on iOS. In response, Apple altered its terms to make sure it continues to earn from non-App Store apps.
Apple has inserted a clause into its terms that mandates developers to pay €0.50 for every download after the first million if an app gets over a million downloads annually. In other words, if an app gets two million downloads in a year, the developer will have to pay €500,000 / $542,000 to Apple for the second million downloads.
The most difficult to understand is that Apple will consider reinstalls and updates as new installs, and the developer will have to pay €0.50 for them if they exceed 1 million annually.
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“Apple’s decision to introduce a €0.50 install fee (covering not just new installs but also updates and reinstalls annually) is hard to justify,” said Jari-Pekka Kaleva, EGDF managing director.
In a statement published on January 31, the European Games Developer Federation (EGDF) said it was disappointed with Apple’s iOS17.4 anticompetitive fee structure. According to EGDF, Apple plans to introduce a new app analytics function with iOS17.4, allowing third-party cloud and game subscription services to compete with Apple Arcade.
EGDF said the DMA will force the iOS maker to work harder to justify the 30% cut it takes from every payment made to developers on their platform. Criticizing the install fees, EGDF said it will make it difficult for any developer to compete with the App Store.
“The new install fee-based structure makes it difficult for any app developer to compete against Apple’s own services like the Apple App Store. It creates a disincentive for game developers to start distributing their games through third-party marketplaces or process their in-game payments through third-party payment systems.”
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In addition to the install fees, the iOS maker mandates any developer that wants to launch a third-party app store to provide “a €1 million letter of credit from an A-rated financial institution”. EGDF also criticized the decision saying it “creates an artificial market access barrier for new third-party marketplaces”.
Consequently, EGDF has called for the close monitoring of Apple’s new policy—and any other gatekeeping platform—to ensure they are properly fulfilling the obligations of the DMA through “swift and robust enforcement actions”, if need be.
Top executives criticize Apple’s third-party app store fee
Top executives angered by the iOS maker’s agelong App Store monopoly have spoken up against the company’s new policy. One of Apple’s strong critics was Spotify CEO Daniel Ek who aired his view on X after scrutinizing the iOS maker’s DMA announcement with his legal team.
“Sadly this is a classic move of an old, dominant company that believes the rules don’t apply to them. Instead of adapting and innovating, they’re twisting the situation, making it seem like the regulators are at fault,” Ek wrote on X. “Or even worse, pretending this has to do with security when it’s clearly a ploy to drive their own profits.”
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“Their reaction to the DMA is a masterclass in distortion. They present a ‘simple’ choice: Stick with their current terms or switch to a convoluted new model that looks attractive on the surface but has potentially even higher fees. Reality check: Apple’s alternative is no alternative at all for some of the world’s most popular apps. It just repackages the old terms and the 30% IAP they want to protect.”
Quoting Ek’s thread, Xbox President Sarah Bond said Apple’s new policy is “a step in the wrong direction”. Bond said she hopes the iOS maker listens to the feedback and “work towards a more inclusive future for all”.
The iOS maker has always cited security for making their platform restrictive and being anti-fair play. However, it may just be a marketable excuse they hide under to protect their exploitative business model.
