Image credits: Bryce Durbin / TechCrunch
Nearly a week after Apple announced major changes to its App Store due to the European Union’s Digital Markets Act (DMA) rules, the company said the market accounted for 7% of global App Store revenue.
Luca Maestri, the company’s chief financial officer, said that the monetary impact of these changes will depend on the choices made by developers to adopt different systems.
“A lot will depend on the choices to be made. “Just to put it in context, the changes have been applied to the EU market, which is about 7% of our global app store revenue,” he said in response to an analyst’s question.
Because of DMA, Apple must allow alternative app stores and allow developers to use third-party payment processors. The company plans to charge a major tech fee if an app crosses one million annual downloads across various app stores.
Amid these changes, Apple posted a record quarter in App Store revenue. The company’s total service revenue was $23.1 billion, an 11% year-over-year increase.
Apple continued its story of defending the App Store and its commission ecosystem, saying it provides the best privacy and security. CEO Tim Cook emphasized that the company will struggle to provide the best experience to users due to these changes.
“If you think about what we’ve done over the years, we’ve really specialized in privacy, security and usability. “We’ve done our best to get as close to the past in terms of what people love about our ecosystem as we can, but we’re going to struggle to provide the maximum amount that we can provide because we have to comply with the regulation,” he said.
In the EU, Apple also had to open up the browser ecosystem by allowing other browsers to use their own engine instead of WebKit. When users turn on their iPhone after updating to iOS 17.4, the company will show a splash screen to let them choose a default browser.
It seems that Apple is exploring more ways to increase its App Store revenue. The company will allow game stores published for cloud gaming services to be distributed globally through the App Store. Additionally, it extends support for in-app purchase systems to mini-games, mini-apps, plugins, and chatbots. For example, Netflix could potentially sell mini-games directly through the app. OpenAI may have a mechanism to subscribe to paid GPTs.
The industry reaction to Apple’s changes has been harsh. Spotify called Apple’s DMA plan “extortion,” while Epic Games’ CEO described it as a “malicious compliance” rife with “garbage fees.” On Thursday, Meta CEO Mark Zuckerberg joined the chorus during the company’s earnings call, saying that Apple’s DMA rules are “so onerous” that he would be surprised if developers chose to. The Verge reported, several developers indicated that they would have to pay a substantial fee if developers agreed to the new terms.
Coalition for Implementation FairnessAn industry group whose members include Epic Games, Spotify, Tile, Basecamp and Deezer called Apple’s changes a “plan of incompatibility.”
“Apple clearly has no intention of complying with DMA. Apple is introducing new fees for direct downloads and payments they don’t do anything about, which violates the law. This plan does not achieve the DMA’s goal of increasing competition and fairness in the digital marketplace – it is not fair, reasonable or discriminatory,” said CAF Executive Director Rick VanMeter.