Nearly a week after Apple announced major changes to the App Store due to European Union Digital Markets (DMA) rules, the company said the marketplace accounts for 7% of its global App Store revenue.
The company’s CFO Luca Maestri said the monetary impact of these changes will depend on the choices developers make to adopt different systems.
“Much will depend on the choices made. Just to keep it in context, the changes were implemented in the EU market, which accounts for around 7% of our global app store revenue,” he said in response to an analyst 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 basic technology fee if an app crosses one million annual downloads across different app stores.
Amid these changes, Apple posted a record quarter for App Store revenue. The company’s total services revenue was $23.1 billion, up 11% year over year.
Apple continued its narrative of defending the App Store and its supply ecosystem, saying it provides the best privacy and security. CEO Tim Cook stressed that the company will not offer the best user experience due to these changes.
“If you think about what we’ve done over the years, it’s that we’ve been really into privacy, security and usability. And we’ve done our best to get as close to the past in terms of the things that are – that people love about our ecosystem as much as we can, but we’re not going to provide the maximum amount that we could 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 start their iPhones after updating to iOS 17.4, the company will display a splash screen to let them choose a default browser.
Apple seems to be exploring more ways to increase revenue from the App Store. The company will allow game streaming stores for cloud gaming services to be distributed through the App Store worldwide. Additionally, it extends support for in-app purchase systems to mini-games, mini-apps, plugins, and chatbots. So, for example, Netflix could potentially sell mini-games directly through the app. And OpenAI may have a mechanism to subscribe to paid GPTs.
The industry reaction to Apple’s changes was harsh. Spotify called Apple’s DMA plan “extortion” while Epic Games’ CEO described it as “malicious compliance” that is full of “useless fees.” On Thursday, Meta CEO Mark Zuckerberg joined the chorus during the company’s earnings call and said that Apple’s DMA rules were “so burdensome” that he would be surprised if developers opted in. The lip reported, several developers have pointed out that if developers agree to the new terms, they will have to pay a significant fee.
Coalition for App Fairnessan industry group with members including Epic Games, Spotify, Tile, Basecamp and Deezer called Apple’s changes a “non-compliance plan”.
“Apple clearly has no intention of complying with the DMA. Apple is introducing new fees for instant downloads and payments it doesn’t process, which is against 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 impartial,” said CAF Executive Director Rick VanMeter.
