Apple Prepares To Alter App Store Policies in Compliance with EU’s Digital Markets Act

After much anticipation, Apple has finally confirmed that it plans to modify its App Store policies to adhere to the European Union's Digital Markets Act (DMA). This follows the initiation of the DMA across the European Union in May.

Apple has been anticipating the introduction of this new ex ante competition regime since it was proposed by the Commission at the end of 2020. This has now been explicitly stated in Apple's latest Form 10-K filing for the fiscal year 2023, indicating a policy shift in the near future.

The shift indicates potential alterations related to the charges Apple imposes on developers for platform access, the management of app distribution outside the App Store, and communication freedoms developers have concerning alternate purchasing mechanisms.

The DMA is essentially the EU's strategy to level the playing field with Big Tech. Traditional competition laws have proven to be less than effective in preventing tech giants from establishing and expanding their monopolistic market power. The measures include promoting competition by allowing business users to promote their offers to users and prohibiting the restriction of third-party app stores.

In July, Apple acknowledged that it was likely to fall under the DMA's purview. An official confirmation arrived in September when the Commission identified seven tech giants, including Apple, as gatekeepers under the new regulations.

Morgan Stanley analysts in a recent report mentioned their belief that Apple’s change of language in its recent report is a testament to the company's readiness to alter App Store policies in Europe. They further added that even with these changes, Apple's App Store would remain a competitive player, citing its convenience, security, and centralized nature.

Last year, enforcement by the Dutch competition authority encouraged Apple to allow local dating apps to make use of alternative payment technologies for in-app purchases from their users, following developers' complaints. This decision, albeit only applicable to dating apps in the Netherlands, provided some insight into possible DMA-induced policy changes for Apple.

The DMA's impact, unlike the Dutch ruling, will encompass the entire EU and apply to more than just a specific type of app. Therefore, the effect is expected to be substantially higher.

March 7, 2024, is the deadline for gatekeepers to comply with the DMA. Non-compliance can result in penalties of up to 10% of the annual global turnover, with more severe penalties for repeat offenses.

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