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Apple has a new plan for its App Store. Many developers hate it.| GuyWhoKnowsThings

After 15 years of dictating how apps are distributed on iPhones, Apple has been forced to take orders from European regulators. A new law to strengthen technological competition requires Apple to open its devices to competing app stores and payment alternatives.

But app makers say Apple's response to the law, which aims to give consumers and developers more choices, is a false choice. They argue that the plan includes new fees and rules that make it prohibitively expensive and risky to make the changes that the law was intended to bring.

The reaction is the latest chapter in a long fight between Apple and app makers. Apple says it must keep tight control over the App Store to ensure quality and security, while many developers say the company rules with an iron fist and abuses its power to demand fees from them and thwart competition from its own services like Apple Music and Apple. Pay.

European regulators largely sided with developers in drafting the Digital Markets Act, a 2022 law that requires Apple to provide app makers with alternatives to sell to iPhone and iPad users. In response to the compliance deadline in March, Apple told developers last week that they essentially had three options in the European Union, home to about 450 million people.

They could stick with the status quo of the App Store system and continue paying Apple up to a 30 percent commission on all sales. Alternatively, they could reduce their commission to 17 percent, while charging a new charge of 50 euro cents for every download over a million a year. Or they could avoid Apple's commission by distributing through a competing app store, while also paying Apple's download fee.

After doing the math, many developers said Apple was offering a worse alternative. Several pointed out that a maker of a free app with 10 million downloads a year who chose to distribute it through a competing app store would owe Apple about $400,000 a month because of the new 50-cent fee, according to a rate calculator that Apple launched. That basically guaranteed that they would stay with the existing App Store model, where they can distribute for free, rather than selling through alternative marketplaces.

Spotify, the streaming music app that filed an antitrust complaint against Apple in Europesaid it may abandon plans to add credit card payments for audiobooks and subscriptions because of fees.

Epic Games, the creator of Fortnite, which sued Apple in 2020, said it had major doubts about its plans to launch a new game store because Apple's plan would give it the power to vet and approve competing app stores. And Hey.com, an email and calendar service, said the proposal had altered its plan to distribute software directly to users, something Apple is not making possible.

“This cannot be what the European Commission meant because it does not change the fundamental dynamic,” said David Heinemeier Hansson, one of the founders of Hey.com. “Apple has made the provisions so poisonous and the bar so high that it's clear no one should ever use this.”

The growing criticism will test how aggressively the European Union will pursue its historic new digital policy. Executives at dozens of app companies have already asked EU regulators to reject Apple's proposal.

Apple said the policies complied with EU law while limiting potential risks to users. “Apple's focus remains on creating the most secure system possible within the DMA requirements,” the company said in a statement.

Andreas Schwab, a member of the European Parliament who helped draft the Digital Markets Act, said the commission would have to weigh Apple's proposal after March 7, when the rules come into force. If the European Commission opens a formal investigation, it could trigger a long legal battle between EU regulators and one of the world's largest technology companies.

“It's all about money,” Schwab said. “The complainers would like to make more money, and Apple wants to make money with its own App Store.”

The reaction comes at an important time for Apple. The US Department of Justice is considering antitrust charges against Apple for non-competitive business practices, a case that could force the company to make more policy changes. Apple is also facing a slowdown in sales of iPhones, iPads and Macs. Wall Street analysts believe that trend will continue when Apple reports quarterly results for the three months ending in December on Thursday. This week, the company is also launching its first new product. in almost a decade, an augmented reality device called Vision Pro.

The Digital Markets Law aims to create more competition in a digital economy dominated by the largest technology companies. These big platforms, which include Amazon, Apple, Google, Meta, Microsoft and TikTok owner ByteDance, will now face new limits by using their dominance in an area such as smartphones, social media or e-commerce to limit users and undermine rival services. .

A spokesman for the European Commission, the executive branch of the 27-nation bloc, said it would not comment on Apple's policy changes before the March deadline. However, he noted that Apple and other big tech platforms had been urged to review any changes they planned to make to comply with the DMA with the companies most likely to be affected, to ensure the changes did not create new anti-competitive problems.

Apple said it had spoken to several developers before publishing its plan, but Apple did not expand its contact with some of its harshest critics, such as the Coalition for App Fairness, a Washington trade group that has nearly 80 members, including Spotify and the Match Group, the creator of Tinder.

“If they were serious about enforcing the law, they would have done it and tried to get people on their side for their announcement,” said Rick VanMeter, executive director of the Coalition for App Fairness.

Apple said it had contacted more than 1,000 developers after the new policy was published last week and would hold sessions to answer their questions. The company said that 99 percent of developers in the European Union would “reduce or maintain” the fees they owe, and highlighted support from people like Justin Kan, one of the founders of the video game streaming service Twitch. “Apple is making important concessions and game developers now have more freedom than ever,” he said in x.

Others disagreed. Andy Yen, CEO of Proton, a Swiss company that offers encrypted internet and email services, said Apple was offering a false alternative to the App Store's existing fee structure. He said the new option was so financially prohibitive, especially the 50 euro cent technology fee, that “nobody in their right mind is going to choose it.”

Yen said the change would cost Proton millions of dollars, in part because so many of its users use its free services. Although it wants to test app stores and alternative payment methods, the company would have no choice but to stay with Apple's current terms, he said.

Apple's new system could radically change the business models of many developers. More than 260,000 apps use the so-called freemium model in which users pay nothing to download an app but have options to purchase premium features, according to Data.ai, an app economics research firm.

Because only a fraction of subscribers pay for content or goods, developers say they couldn't afford to pay a 50-cent fee for each download.

Apple also included terms in its new policy that prevent developers from reversing their decisions. Once a company like Spotify or Proton decides to move to Apple's new fee structure, there is no turning back.

“It's designed to make choosing the new system a huge risk for your business,” Yen said. “It's a huge deterrent.”

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