Apple has historically kept a tight grip on its ecosystem and the experiences within it. The App Store’s strict guidelines affecting what developers can and cannot offer is the perfect example of how restrictive (or exclusive, depending on your viewpoint) the marketplace is.
However, with the introduction of the European Union’s new Digital Markets Act (DMA), the entire landscape of app discoverability and installation can potentially change. New Google Play fees have already been pushed live in response to DMA and a change in Apple’s fee structure is also well underway. Despite the tech giant’s pushback, sideloading is now a reality, providing developers a chance to offer services extending beyond the limits of the App Store.
March 1st, 2024 marked the beginning of Apple’s sideloading permissions, allowing third-party marketplaces to operate in the iOS ecosystem. Previously, users’ sole platform for downloading apps on iPhone was the App Store. With the enforcement of the EU’s DMA, Apple is now legally obliged to open its digital doors to external app marketplaces.
The premise behind allowing third-party marketplaces to operate in the iOS ecosystem is to create a more competitive environment favoring developers. This entails more monetization options, fewer restrictions to the types of apps users can download, and increased flexibility when organically advertising the app itself. One of the main drivers, however, is avoiding the fees associated with in-app purchases and subscriptions.
Through third-party marketplaces, developers can avoid paying the 30% commission rate Apple charges for in-app purchases and subscriptions, which drops to 15% after a subscriber’s first year on the app. An app downloaded from an external app store, on the other hand, is subject to whatever fees (or lack thereof) the marketplace establishes, providing more opportunity for developers to choose where to distribute their apps.
Apple argues the change comes with risks regarding user data privacy, as the app being downloaded no longer adheres to App Store guidelines. It also raised concerns about the experiences being offered and how personal information is handled. To combat this, advisories are put in place when a user tries to navigate outside of the App Store toward a marketplace offering third-party apps.
As much as DMA intends to provide a healthier business environment for developers, there’s a catch. Only those apps that have been a part of Apple’s Developer Program for two years and attained at least one million downloads in the previous year will be eligible for Web Distribution in the EU.
Essentially, you must be operating in Apple’s ecosystem first while also having previously built your own audience of 1 million new users. Once you’ve passed that hurdle, Apple applies its Core Technology Fee (CTF). The fee equates to €0.50 per new annual install over one million in the past 12 months.
The introduction of the EU’s DMA marks the start of a potential transformation for developers operating in the European market and those looking to enter in the future. While there is tremendous opportunity in no longer being tied to Apple’s App Store restrictions, developers looking to leverage third-party monetization should tread carefully.
The additional costs that accompany operating outside of the iOS ecosystem can prove unsustainable for smaller, independent developers. Apple’s new CTF fee can quickly add up, especially considering it applies to apps whose downloads surpass 1 million unique users.
Developers will have to closely monitor how the situation unfolds in the coming months and what opportunities and challenges arise as a result of Europe’s new legislation.
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