Developers are not sure about Apple’s App Store rules

Apple’s big challenge: Where will we go from here? How will we stand when the EU Commission takes up the challenge of selling stuff in the App Store?

For more than a decade, iPhones have acted like tightly controlled supermarkets. Developers can’t just wander in and sell stuff. Instead, their app needs to pass a vetting process to sit on the shelves of Apple’s lauded App Store. If they want to sell something within their app to Apple users? That’s fine. But for the biggest developers, Apple is going to take a hefty 30 percent cut of every purchase.

It will be awhile before we know whether other developers choose to follow Apple’s new rules. One of the biggest obstacles Apple may face in the coming days is whether the EU Commission approves the company’s changes. The Commission will start evaluating companies’ responses when the DMA goes into effect on March 7th, and Commissioner Thierry Breton has already warned: “If the proposed solutions are not good enough, we will not hesitate to take strong action.”

The price could be worth it for a big company. For the last couple of years, Apple has slashed its 30 percent cut on in-app purchases of products such as audiobooks and made it impossible to subscribe in its app. If it were to convert a free user to a paying one via a third-party store, it would make up 50 euro cents a year. It is a risk, because a lot of users will not pay a dime, andSpotify will have to pay for them. The company will have to find a way to make up for the loss of download fees with gains from new subscriptions and purchases.

This all makes for a potentially expensive proposition. Developers can play it safe, remaining inside Apple’s App Store and sticking with the old 30 percent cut and no installation fee if they choose. If they decide to free themselves from Apple’s revenue cut and App Store rules, they must pay a heavy fee in exchange.

Only once apps are popular enough that caveat comes into play. Any app that sees more than 1 million installs per year must pay Apple a 50 euro cent fee (about 54 cents USD) for every new installation over that first 1 million — that fee is charged once per every user each year. App updates count as installations, too. No major app will be without an update more than a year, meaning any sufficiently popular app will be paid 50 euro cents per user per year above the initial 1 million. It’s not just apps, either. Third-party app stores must also pay Apple 50 euro cents per user per year, and they do not receive the 1 million install grace that apps do.

Here’s some extremely back-of-the-napkin math: Facebook has 408 million monthly users in Europe across all platforms — web, Android, iOS, etc. iPhones make up about one-third of the mobile phone market in Europe. If one-third of those Facebook users have the iPhone app installed, Meta would be paying Apple €67.5 million (around $73.4 million) per year, just for Facebook. There would be more than one fee for Messenger, and other applications. It’s only for active users. Meta would also have to pay for people who installed the app years ago and never open it up but still get automatic updates.

There are two more complications in all of this: a company has to launch a third-party app store, and developers then have to migrate their users over to that store. It’s not easy for apps to shift users from one store to another. A user needs to uninstall the old version of the app they downloaded from Apple’s App Store before installing the new app store.

Testut tells The Verge that it is reasonable for Apple to ask for a 1 million dollar letter of credit. While it does raise the barrier for entry, I have learned that running a marketplace comes with a strong responsibility to protect users. “By requiring proof of credit, this ensures marketplaces are at least legitimate businesses, reducing the risk of ‘scam’ marketplaces taking everyone’s money and leaving.”

Testut says that he sees this as positive for the platform. “For the first time ever, entirely new classes of apps can exist on iOS, which I believe will push the platform forward.”

Apple’s new guidelines are not stopping people from adopting them. Plans are in the works to officially launch the app store in the EU. AltStore developer Riley Testut tells The Verge that it’s working toward meeting Apple’s requirements so it can allow users to download AltStore directly from their website. Testut says developers will be able to publish their apps for free on AltStore, and that they’ve added “deep Patreon integration so that developers will be able to distribute Patreon-exclusive apps to just their patrons.” altStore won’t charge a commission on Patreon-exclusive apps

Some developers have criticized the new Apple guidelines. Epic Games CEO (and part-time Apple critic) Tim Sweeney notably called out the changes as “hot garbage,” even as Epic announced it would be launching its own app store through them. The new business terms Apple has have a number of disadvantages for larger developers. The new rules would add a new 0.50 to the commission for Apple. The core technology fee is for apps with over one million downloads. For successful apps, those fees add up.

The Coalition for App Fairness, a nonprofit organization spearheaded by Epic and focused on fostering mobile app competition, had a similar response. Rick VanMeter said the plan isn’t fair, reasonable or non-discriminatory, and that it requires developers to choose between two anticompetitive and illegal options. Either stick with the terrible status quo or choose a new convoluted set of terms that are not good for developers or consumers.

David Heinemeier Hansson, the creator of Ruby on Rails and co-founder of Basecamp, says the new guidelines will discourage developers of big apps like Meta from using alternative app stores. The poison pill was designed to make sure no app store ever takes off, according to Heinmeier Hansson. “Without any of the big apps, there will be no draw, and there’ll be no stores. Competition in the digital market will not be created by the EU.

Four years ago, lawmakers in Brussels started to seriously listen to complaints by the likes ofSpotify that Apple was limiting choice and hurting competition in the App Store. The European Union’s solution was a law called the Digital Markets Act (DMA). The idea wasn’t to break up Big Tech, former French digital minister Cédric O explained in a press conference in 2022. The law was intended to break these platforms open.

Andy Yen, the founder and CEO of Swiss email and telecom provider, Proton, said the new fees and restrictions reinforce Apple’s hold on its ecosystem.