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Apple will open iPhone to alternative app stores, lower fees in Europe to comply with regulations


Apple's App Store icon is displayed on an iPad in Baltimore, U.S., March 19, 2018. /AP
Apple's App Store icon is displayed on an iPad in Baltimore, U.S., March 19, 2018. /AP

Apple's App Store icon is displayed on an iPad in Baltimore, U.S., March 19, 2018. /AP

Apple has unveiled a sweeping plan to tear down some of the competitive barriers that it has built around its lucrative iPhone franchise, but the new choices opening up to consumers and app developers will only be available within Europe to start.

The announcement Thursday comes as Apple moves to comply with upcoming European regulations aimed at giving consumers the choice to use alternative app stores and provide app developers with unprecedented avenues to avoid paying fees that have become a gold mine for the tech giant.

The overhaul, scheduled to take effect in early March, will include concessions that Apple had previously refused to make in its app store, including lowering the fees it collects from developers in Europe.

Most notably, Apple for the first time will allow iPhone users in Europe to use app stores other than the company-operated one that comes installed on the mobile device. It will also enable developers to offer alternative payment systems that could help them make more money while potentially lowering their prices.

But Apple said it fears opening up the iPhone to outsiders will also increase chances consumers venturing outside its proprietary system and be exposed to hackers and other security problems.

The U.S. phonemaker said it is taking what it sees as a risky step only to comply with European rules known as the Digital Markets Act, or DMA, that take effect March 7.

Falling into line with that EU mandate will bring "unavoidable increased privacy and security threats," warned Phil Schiller, who oversees the Apple app store.

The revisions in Europe will decrease the 15-to-30-percent commission that Apple plans to continue charging throughout the rest of the world on in-app transactions completed on the iPhone. The DMA will ban Apple from imposing a 30 percent commission in Europe once it takes effect.

Those in-app commissions are a major money maker for Apple's services division, which in recent years has been among the company's fastest-growing segments. In Apple's last fiscal year, the services division generated $85 billion in revenue, making it the company's second biggest segment behind sales of the iPhone itself.

That review process and other steps that Apple said it is adopting in Europe provoked ridicule from one of the company's most outspoken critics, Epic Games CEO Tim Sweeney, whose company makes the popular video game Fortnite. Sweeney described Apple's revisions in Europe as "a devious new instance of malicious compliance" in a Thursday post on social media.

Epic took Apple to trial in 2021 in a fight over the iPhone commission system in the U.S. Although Apple prevailed on most claims in that legal showdown, it resulted in the ruling that spurred the recent adjustments to the iPhone app payment-processing system in the U.S.

Source(s): AP
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