Apple's compliance with European Digital Markets Act (DMA)

Last week, Apple dropped what some people considered a bomb by allowing third-party payments in the apps distributed on the App Store and, most importantly third-party App Stores on iOS in Europe.

These changes are part of a bigger compliance update forced upon Apple by the European Union as a consequence of its Digital Markets Act (DMA).

What happened in the World?

This is not the first time Apple is facing this kind of regulation, but this is the first time it reached such a large market scale:

• In 2021: South Korea enacted a law that allows app developers to use third-party payment options for In-App purchases.
• In December 2021 The Netherlands’ Authority for Consumers and Markets (ACM) said Apple broke the country’s competition laws and ordered the California company to change the App Store payment policies to allow 3rd party payments for Dating Apps in the country.

In all these territories Apple applied the same rule: You can use a 3rd party payment system and benefit from a … 3% discount. You have to declare how much revenue was generated using the 3rd party payment and pay a 27% (or 12% for SMB and some other programs) commission fee. Which ended up being the same but having to handle more by yourself (billing, VAT, refunds, and declaration to Apple).

We were expecting the same kind of response for DMA but Apple came with a new one.

What is European DMA?

The Digital Markets Act (DMA) is a new regulation that was voted by the European Union in 2022 and applicable since May 2nd, 2023.

This new regulation aims to free competition and end monopolistic positions.

For months we were waiting for Apple answers that had to come before March 1st, 2024 - the deadline set by the EU.

This January 25th, 2024, Apple announced its answer to this new regulation and what it will do to comply with it. Truth be told, the provided solutions were quite far from what anyone expected and were also quite complex to figure out.

This impacts several things:

• Side loading
• 3rd party payments
• API for contactless payment
• Browser choice on iOS
• Web engines (WebKit was the only one allowed)

Developers will also be able to:

• request new APIs to interoperate with the device (Bluetooth, camera…) or software (HealthKit, iOS…)
• get new analytics reports like App Store engagement, app usage, and SDK usage.

In this article, we will focus on Side Loading and 3rd party payments.

What changes with DMA?

* for SMB, Video Partner and News Partner programs

These new terms are much more complex to analyze than the previous ones (which were always a lost cause). The huge discount on commissions must be balanced with the Core Technology Fee.

This is why a few hours after the announcement we created a simulator to check if these new terms were more interesting.

We collected more than 400 simulations and most of them led to the same results. Stay on the current terms unless …

When is it more interesting to switch to Apple's new terms and conditions?

It may seem that the consensus is leaning towards "no one will benefit", which is the widely spread sentiment across the Internet.

But now the dust has settled, we can pinpoint specific scenarios where switching could actually be beneficial.

Of course, if your app boasts a huge LTV, paying the Core Technology Fee can be manageable. There are also particular cases where the new terms might offer an advantage:

• If you heavily monetize in countries requiring alternative payments due to low credit card or App Store conversion rates (Africa, Asia, Middle East).
• If you are working on highly profitable niches such as security or productivity tools.
• If you are an Indie developer managing numerous small apps, each with fewer than 1 million downloads/updates, without plans to scale or monetize through paid UA.

Remember!

• No rush to decide. Switch to the new terms at your convenience.
• Core Technology Fees are per app, not account-wide. With 10 apps under 900k downloads each annually, you owe nothing to Apple.
• Choose wisely. After switching, reverting to previous terms is not an option.
• iOS exclusive. The new terms don't affect iPadOS, tvOS, visionOS, or watchOS—where the existing rules remain unchanged.

Q&As

Is it possible to have App Store In-App Purchases alongside Stripe?

• Dual payment methods are allowed. In the App Store's binary, you can offer both payment methods simultaneously.
• Stripe for European users. Make Stripe available exclusively in apps for users in European countries.
• Report Stripe earnings. You must declare revenues generated through Stripe via a specific API provided by Apple.

Is it possible to come back to the current terms after accepting to switch to the new ones?

No this is not possible. Once you accept, you’ll have to stick to these terms and won’t be able to go back to the current ones. What’s more come below… 👇

What happens if I accept the new terms and sell my app to another company that has not?

Accepting the new terms and then selling your app means the acquiring company must also adopt these terms for the app.

Will we have to declare somewhere the number of downloads made on third-party stores?

No.

If I create a developer account tomorrow will I be on the new terms?

You will have the option to either accept the current terms or the new terms. This choice will be available to you regardless of when you subscribe.

Will I need an Apple developer account to publish my app solely on a third-party store?

Yes. Apple requires notarization for each app distributed through third-party stores to ensure the security of iPhone users, protect their privacy, and maintain the integrity of their devices, including photos and contacts. Access to developer tools and the notarization process will necessitate having an Apple developer account.

Will Apple control which apps can be published on third-party stores?

Besides the integrity checks described in the previous questions, Apple won’t filter apps that are distributed in third-party stores.

It is up to each vendor to settle their rules. This can lead to the availability of new types of apps that were previously rejected by Apple, such as those involving explicit content, gambling, or realistic violence.

Apple also aims to prevent the proliferation of identical or similar apps, leaving it up to the individual store vendors to establish their own guidelines.

At this stage, as long as there are no third-party vendors it is hard to predict precisely how it will evolve or what boundaries will be pushed forward by new store vendors.

What justifies this fee for third-party stores?

No matter how apps are distributed or paid for, Apple will continue to provide services to developers. Apple also wants to make sure that the iPhone remains a safe place and will be notarizing (review) each application.

This review covers various aspects including safety, security, privacy, accuracy, and functionality, ensuring that apps meet certain standards before being made available on third-party stores. This assessment combines both automated and human controls.

More questions?

Apple opened consultations with their experts to help you make the best decisions and fully understand the consequences and opportunities of this new regulation.