Big Tech

Apple complies with new EU regulations and revolutionises the iPhone: here's what changes

The news comes in March: App Store exclusivity and Apple Pay come to an end. But from Cupertino they are very critical

by Biagio Simonetta

Apple si piega alle nuove norme Ue e rivoluziona l’iPhone: ecco cosa cambiaapple

5' min read

5' min read

It is a gritted-teeth 'OK', the one coming from Apple, towards the European Union. It is an 'OK' that will take concrete form from next March, and with the release of the new operating system for the iPhone (iOS 17.4), which will in fact overturn the rules, dismantling the rigidity that Apple has imposed in these 17 years of experience in the world of smartphones. The Cupertino company has in fact announced the go-ahead for the arrival on its devices of alternative stores, payment services competing with Apple Pay, and other changes due to the now imminent arrival of the new Digital Markets Act strongly desired by the EU Commission. A situation that in some ways translates into a new European victory against Apple, after the story of the Usb-C charging connector that from this year has taken the place of the famous lightning connector on the new iPhones.

We were saying 'OK' through clenched teeth, because the Californian giant does not fail to emphasise its point of view, not too favourable (so to speak) to the new regulatory dictate approved in Brussels. And this is immediately apparent. Between the first lines of the official note issued by Apple, it is written: "In all of these changes, Apple is introducing new protections that reduce, but do not eliminate, the new risks that the DMA poses to EU users. With these steps, Apple will continue to provide the best and most secure experience possible for EU users."

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What is the Digital Markets Act

The Digital Markets Act is the new European regulation on digital markets, approved by the EU Parliament on 5 July 2022. It entered into force on 1 November, with the - very ambitious - aim of combating unfair market practices and distortions of competition by Big Tech. From the day of entry into force, six months have been allowed for the companies involved to adapt to the new rules. Six months expire on 7 March next, when the new regulation will be fully effective. In the event of violations, fines of up to 20% of turnover are envisaged.

Apple's moves

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Apple, then, adapts to the DMA. And the changes (which only affect European users) will not be trivial. They will be introduced, as mentioned, with the new iOS 17.4, starting in early March. "The changes we are announcing today comply with the requirements of the Digital Markets Act in the European Union, while helping to protect EU users from the inevitable growing privacy and security threats that this legislation brings. Our priority remains creating the best and most secure experience possible for our users in the EU and around the world," said Apple's Phil Schiller. "Developers can now learn about the tools and terms available for alternative app distribution and alternative payment processing, new features for alternative browser engines and contactless payments, and more. Importantly, developers can choose to remain on the same current contract terms if they wish."

From Apple Pay to the famous Store

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Saying that for developers Apple has set up an area where the new rules are explained in detail (and new APIs introduced), for those with iPhones the changes will be substantial. The Cupertino giant will unlock new APIs that will allow new contactless payment services to be developed. In essence, therefore, the iPhone's NFC technology will no longer be exclusive to the Apple Pay service. This is an enormous opportunity for players in the sector, who will however have to deal with the loyalty of Apple users, who are usually reluctant to abandon Cupertino's services. The same applies to the App Store, Apple's shop for apps: it will also be possible to have different shops on the iPhone on which to download apps. However, developers will still have to submit apps to Apple's scrutiny for obvious cybersecurity risks and fraud, and Apple will charge a 'core technology fee' to major app developers even if they do not use any of Apple's payment services.

News that does not fully convince Apple: 'The new options for EU developer apps create new risks for users and their Apple devices. - is written in the official note - Apple cannot eliminate these risks, but within the constraints of the DMA, the company will take steps to reduce them". Measures such as Notarisation for iOS apps, 'a baseline review that applies to all apps, regardless of distribution channel, focused on platform integrity and user protection. Notarisation involves a combination of automated checks and human review'. But also additional malware protections 'that prevent iOS apps from launching if malware is found after being installed on the user's device'.

Modifications to Safari

Reminding us that currently iOS users already have the option of setting a third-party web browser other than Safari (e.g. Google Chrome) as their default, with the changes imposed by the DMA Apple now introduces a new choice screen that will appear when users first open Safari in iOS 17.4 or later. This screen will prompt EU users to choose a default browser from a list of options.

Apps and developers

It has to be said that the most obvious novelties concern apps. Apart from the fact that it will be possible to bypass Apple's official App Store (the famous 'sideload'), there is a whole series of changes affecting developers operating in the European Union. These are new commercial terms that they will have to accept in order to use the new features for alternative distribution or alternative payment processing (outside of the App Store). The company explains that 'developers operating under either set of commercial terms can continue to use the App Store's secure payment processing and share their apps on the App Store in the EU'. And again: 'the new commercial terms for apps in the EU are necessary to support the Digital Markets Act's requirements for alternative distribution and alternative payment processing. This includes a pricing structure that reflects the many ways Apple creates value for developers' businesses, including distribution and discovery on the App Store, secure payment processing on the App Store, Apple's reliable and secure mobile platform, and all the tools and technology to build and share innovative apps with users around the world."

In general, iOS apps on the App Store will pay a reduced commission of 10 per cent (for the vast majority of developers and subscriptions after the first year) or 17 per cent on transactions of digital goods and services. iOS apps on the App Store can use the App Store's payment processing for an additional 3 per cent commission. Developers can use a payment service provider within their app or direct users to their website to process payments without any additional fee for Apple. Finally, iOS apps distributed from the App Store and/or alternative app marketplaces will pay €0.50 per annual installation above a threshold of 1 million installations.

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