Summary
- The EU's Digital Markets Act has successfully reined in big tech companies by forcing them to stop anticompetitive practices within EU countries.
- Apple's compliance plans with the DMA include new options for app distribution, browser engines, and payment service providers, but these features are only available in the EU.
- Apple's decision to restrict features to the EU shows that it will only make moves to increase competition if forced, which may prompt US governments to follow suit.
For decades, the United States completely dropped its trust-busting attitude, allowing companies to grow and merge together with nearly zero limits. That's starting to change, in part because US lawmakers have no doubt taken inspiration from the European Union. The EU has managed to reign in big technology companies with a degree of success we haven't seen before. It's all connected to the Digital Markets Act, which is a piece of groundbreaking legislation that forces some companies to stop their anticompetitive practices within EU countries. Goals like interoperability, cross-platform support, standardized connectors, and more are not just coming to reality — they're becoming law.
The deadline for compliance with the DMA is fast approaching, and Apple today shared its plans for compliance. It includes things like support for new APIs, third-party app stores, third-party payments, and third-party default browsers. Here's the catch: these features are only available to users in the EU.
The move is incredibly short-sighted in nature. While it's true that Apple will benefit greatly by restricting these options to EU customers for now, it won't benefit forever. It shows that Apple will only make moves that increase competition if it is forced, opening the door for US governments to follow in the EU's footsteps.
Apple announced its compliance plans
In the EU, it had to implement changes in March that comply with the DMA
If you haven't caught up with the news yet, we'll try and get you up to speed briefly. The EU's Digital Markets Act gives the governing body the power to designate big tech companies as "gatekeepers." Apple, as well as a few of its competitors, was designated as a gatekeeper by the EU. Then, the DMA asks the EU to look at which of a gatekeeper's services should be considered a "core platform service." In simple terms, the EU says that services directly impacting commerce in EU countries can be designated as core platform services. If you guessed that the EU designated the App Store a core platform service, you'd be right.
The core platform service designation gives the EU the power to force Apple to open up the App Store. To be frank, the DMA is still quite vague at the moment, and will be refined over time. For now, we know a few ways that Apple will change iOS, web browsing, and the App Store to comply with the DMA. It shared these new policies in a press release today.
Here's a quick rundown of everything that's changing, or is being added:
- New options for distributing iOS apps from alternative app marketplaces
- New framework and APIs for creating alternative app marketplaces
- New frameworks and APIs for alternative browser engines
- Interoperability request form
- Notarization for iOS apps
- App installation sheets
- Authorization for marketplace developers
- Additional malware protections
- Support for default third-party browsers
- New options for using payment service providers (PSPs)
- New options for processing payments via link-out
- Reduced commission of either 10% or 17% for purchases
- 3% payment processing fee for using the App Store for payment
- Core Technology Fee of €0.50 for each first annual install per year over a 1 million threshold
For ages, people have criticized iOS for being locked-down and being part of Apple's "walled-garden" ecosystem. To many, support for things like sideloading apps, third-party app stores, and third-party payment processors is a win for the platform. With that being the case, and Apple's decision to restrict the features to EU countries, Apple might be in trouble. Apple has already come under fire from consumers, activists, and the US government for its anticompetitive practices. That's likely only going to intensify.
Governments probably shouldn't get involved
But companies like Apple have left them no other options
The disappointing part of all this is that governments probably should not be directing tech companies. Take the EU's mandate that USB-C must be on nearly all consumer electronics for power and charging for example, which brought the connector to the best iPhones. USB-C is a good connector now, but it might not be years from now. There are provisions in the EU's law that will allow new universal standards to be developed. In fact, the law's intention is to make a universal standard forever, not to make USB-C the standard forever. It's possible that USB-C could be replaced down the road by a new — but still universal connector — like how USB-C replaced Micro USB.
However, there are definitely reasons to be concerned about whether this will be the case. We've never seen a connector as ubiquitous as USB-C. There's an inherent risk associated with trying to replace a connector like USB-C. Will a company really spend millions on researching and developing a new connector that it might not even be allowed to use? There isn't a ton of precedent for something like this, and some companies are worried that the EU regulations will stifle innovation.
This appears to be Apple's stance on the issue as well. In an interview with The Wall Street Journal, here's what Greg Joswiak, Apple's senior vice president of worldwide marketing, had to say about the EU's decision. "We will have to comply [with the EU's law]," Joswiak said. "But it would have been better to not have a government be that prescriptive."
Apple used even stronger language in its press release today announcing the changes:
The new options for processing payments and downloading apps on iOS open new avenues for malware, fraud and scams, illicit and harmful content, and other privacy and security threats. That’s why Apple is introducing protections — including Notarization for iOS apps, an authorization for marketplace developers, and disclosures on alternative payments — to reduce risks and deliver the best, most secure experience possible for users in the EU. Even with these safeguards in place, many risks remain.
Apple could have chosen its own destiny
It has instead gambled on whether the US will crack down on its ecosystem
Apple may have made a critical error in not expanding some of these offerings to all users worldwide. There's just one feature — a less-stringent review process for game streaming apps, or apps with mini-games within — available worldwide. By not doing so, the company lost its chance to make changes to iOS on its own terms. It could have followed a similar pattern to how it handled bringing RCS messaging to the iPhone. Apple announced that it would bring RCS to iPhones this year as the EU was deliberating whether to designate iMessage as a core platform service. Based on current reports, the RCS concession was enough for the EU to back off.
Apple waited to open up iOS in the EU until it was forced, and lost its chance to control how it happened. Now, it may suffer the same fate in the US. We asked Apple why it didn't bring these features to the US, and the company didn't respond to our request for comment in time for publication. However, it shared the following statement with 9to5Mac:
Apple is not offering these changes outside of the EU because this is not the safest system for our users. We’ve been very clear about new threats the DMA introduces — including increased risks for malware, fraud and scams, illicit and objectionable content, and reduced ability for Apple to respond to and remove malicious apps. The changes required by the DMA also involve new technologies and processes that are untested and may require further development.
Apple gave the US a regulation roadmap
Now, the US government knows exactly what to do to make changes
Not only that, but Apple has now shown US lawmakers exactly what they need to do to bring the same experience to US customers. Following in the EU's footsteps, the US government could create legislation similar to the DMA that would require Apple to stop its anticompetitive practices in its home country. There's clearly support for something like that, too. The US Department of Justice, as well as many states, have begun legal battles with Apple over alleged antitrust violations. Additionally, a few US lawmakers — including Senator Elizabeth Warren — have openly criticized Apple for this reason.
With today's decision, Apple has made something clear. It's only going to increase competition if it is required to do so by law. As a result, it signaled to lawmakers around the world that it's time for decisive regulation of big tech worldwide.
