Apple's Struggle with the EU's Digital Markets Act: Resistance, Restrictions, and Repercussions

· 5 min read
Apple's Struggle with the EU's Digital Markets Act: Resistance, Restrictions, and Repercussions

The Digital Markets Act (DMA) passed by the European Union aims to increase competition and provide more choices for consumers when it comes to digital platforms and devices. This has major implications for tech giants like Apple, which have enjoyed a dominant position in their respective markets.

In response to the DMA, Apple has made some changes to its App Store policies and web browser engine requirements for iOS devices sold in the EU. However, many of these changes seem designed to limit developer and consumer choice while still appearing to technically comply with the DMA.

Alternative App Stores in the EU

One major component of the DMA requires that Apple allow alternative app stores on iOS in the EU. However, the way Apple has implemented this policy is far more locked down than many hoped for or expected:

  • Apple will review and extensively vet every alt store, with opaque and likely prohibitive criteria
  • Developers must have a $1 million line of credit to even be considered for running an alt store
  • Apple will charge alt stores:
    • €0.50 for each user account download of the alt store itself
    • €0.50 for each app download from the alt store, after 1 million downloads per app
  • Developers can stay exclusively on the App Store to avoid fees, but if they also list their apps in alt stores, Apple will charge them a commission fee for App Store downloads too

The barriers put in place make it extremely difficult for small developers to realistically operate alternate app stores. The fees per download also ensure that both users and developers pay Apple tax no matter what store they use.

This is far more locked down than the Android approach, where users can easily check a box to install apps from outside the Play Store. The EU version retains all of Apple's customary restrictions around app distribution, defeating much of the spirit behind mandating competition.

Restricting Browser Engines to the EU

Another major change instated by the DMA is that Apple can no longer mandate all iOS browsers use their WebKit rendering engine. Browsers like Chrome, Firefox, and others will be able to integrate their own engines to enable greater functionality.

However, Apple has once again imposed regional limitations, as this browser engine allowance will only apply to apps distributed in the EU. This means browser developers face a choice:

  • Stick with WebKit universally for a consistent experience
  • Maintain separate EU browser versions with huge added complexity

By fragmenting iOS distributions this way, Apple makes it exceedingly difficult for developers to realistically leverage the DMA allowance. The incentives push them to avoid the trouble of managing separate code bases and stay locked into WebKit.

Furthermore, Apple will now interrupt EU users when first opening Safari, forcing them to pick a default browser before they can even use the web.

While giving users a choice sounds good in theory, the timing and presentation essentially strong-arm people into sticking with Safari.

Apple's response to the DMA, likely isn't entirely legal, and Apple maybe already gearing up for extended legal battles. They know these overly restrictive policies contravene what the DMA aims to accomplish. However, by exploiting loopholes and technicalities in the legislation language, they can likely drag out implementation for years in the courts.

Their official messaging about security concerns, etc. lays the groundwork to justify these measures as good faith efforts during the drawn-out lawsuits ahead.

It is highly likely that Apple wants to delay meaningful adoption of alt stores and non-Safari browsers for as long as possible. Even if they cannot support the restrictions forever, stalling for 3-5 years still protects their bottom line in the interim.

What Does Apple Have to Lose?

At its core, Apple's insistence on locking down iOS comes down to money and the sustainability of their business model. Acting as gatekeeper over app distribution and payments, Apple's 30% commission on digital transactions represents a major revenue stream they want to protect.

However, the EU determined this exclusive control is monopolistic and harms innovation. The DMA aims to spur competition and let developers distribute apps without forced middlemen or arbitrary restrictions.

Faced with this threat to their cash cow, Apple seeks to make operating outside its walls as unappealing as possible. The technical and financial hurdles try to ensure most developers still view sticking with the App Store as the only logical choice.

What Changes Can We Expect From Here?

Apple's response could bring about ugly legal battles across the board as Apple disputes interpretations of the DMA. However, long term the EU likely will not back down on the core principles and intentions behind their antitrust legislation.

Over years of court cases and policy revisions, Apple will probably have to lower barriers until alt app stores become truly viable options developers want to actively engage with.

The question remains open on whether these changes stay isolated to EU iOS users over time, or eventually permeate across Apple devices globally. With how stubborn Apple is acting now, the former seems more probable. However, if enough regions beyond Europe similarly mandate increased competition, Apple may ultimately cave to enable consistency across their platform.

Should Big Tech be regulated?

Stepping back, the situation opens important questions around government oversight of influential technology companies. On one hand, insufficient regulation allows them to squeeze competition and exploit consumers. But overbearing legislation also risks unintended innovation consequences.

As seen in reactions to the DMA, even individuals supporting the broad goals can disagree on specific policies or methods. Reasonable people can debate where lines should be drawn to balance open ecosystems vs reasonable security measures.

However, Apple's smartphone operating system controls the personal computing platform for millions worldwide. Granting a single corporation unilateral dominion over that far-reaching digital experience clearly demands some public accountability check.

The EU's effort resembles past antitrust actions against monopolies like Microsoft's bundling Internet Explorer on all Windows PCs. Similarly, web browser selection intervention aims to inform consumers unfamiliar with Apple restricting choices on their general computing device.

Are occasional pop-up interruptions ideal for users wanting to browse websites unimpeded? Perhaps not. But the issue originates from Apple denying alternate browser engines for years before DMA enforcement, not regulators themselves. Disrupting that status quo now enables restoring appropriate options aligned with reasonable consumer expectations for multipurpose computing machines.

Apple's Artificial Dilemma

Additionally, arguments suggesting the DMA complications underserves users wanting Apple's simplicity also overlook the artificial conditions created. Apple constructed an ecosystem where everything tunnels through them by design, then weaponizes perceived complexity when loosened control.

However, integrating alternative stores and payment handling in consumer-friendly ways remains entirely possible. For example, developers currently distribute apps seamlessly across both iOS App Store and Android Play Store without issues. The obstacles result from intentional business decisions by Apple, not inherent technical limitations.

Android allows sideloading apps or leveraging multiple stores while still centralizing around Google services for those preferring simplicity. iPhones could easily implement similar flexibility scaled accordingly while maintaining easy defaults through Apple for those desiring convenience.

Instead, Apple opts to punish users unless completely contained within their walls, further perpetuating myths that more open platforms cannot possibly match usability. In reality, delivering additional options via sound design and transparency need not impose problems remotely approaching this DMA response.

Closing Thoughts

In the end, Apple created extraordinary long-term profits by severely restricting customer freedom and application market competition. Europe's Digital Markets Act takes reasonable legislative action aimed at restoring appropriate balance, benefitting innovation and consumers.

Apple's reactionary efforts doubling down on those same tendencies, through intentional design hostility among other measures, represent a desperate scramble to cling onto that profits-above-all approach now being challenged externally.

While the DMA perhaps guarantees positive change over an extended timeline, Apple's unwillingness to embrace that change cooperatively imposes unnecessary short-term pain. By petulantly strong-arming users into staying trapped inside walled gardens, Apple risks backsliding public trust earned delivering generally excellent products.

Hopefully, substantial legal losses combined with customer frustration pressures Apple into properly adopting DMA principles relatively soon. Their stellar device engineering and interface polish built a loyal following that enjoys using Apple products. Now determined legal and social pressure must steer Apple leadership toward policies respecting customers accordingly as we