Apple finds itself at the center of a storm after unveiling significant adjustments to its App Store in response to the European Union’s Digital Markets Act (DMA). According to Apple’s chief financial officer, Luca Maestri, these alterations are expected to impact about 7% of the company’s global App Store earnings.
The DMA’s mandate forces Apple to open its gates to alternative app markets and allow developers to use third-party payment processors, shaking up its longstanding commission structure. However, amidst these changes, Apple proudly announced a record-breaking quarter for App Store revenues, with overall services revenue reaching a whopping $23.1 billion, marking an 11% surge year-on-year.
Apple remains steadfast in its defense of the App Store model, touting its commitment to privacy and security. CEO Tim Cook underscored the company’s efforts to preserve the essence of its ecosystem, albeit acknowledging the inevitability of compromises due to regulatory compliance.
In compliance with the DMA, Apple is also opening up its browser ecosystem, allowing users to choose their default browser engine, a move set to debut with iOS 17.4.
But Apple isn’t stopping there in its quest for App Store revenue growth. The company announced plans to permit streaming game stores for cloud gaming services and extend support for in-app purchases to mini-games, mini-apps, plug-ins, and chatbots. This means potential new avenues for companies like Netflix to peddle mini-games and for entities like OpenAI to offer paid GPT subscriptions.
However, not everyone is singing Apple’s praises. Industry giants like Spotify and Epic Games have decried the DMA changes, with Spotify labeling Apple’s plans as “extortion” and Epic Games’ CEO criticizing them as “malicious compliance” laden with “junk fees.” Mark Zuckerberg of Meta joined the chorus of dissent, lambasting Apple’s DMA rules as overly burdensome during a recent earnings call.
The Coalition for App Fairness, representing notable players like Epic Games and Spotify, slammed Apple’s adjustments as a “non-compliance plan,” arguing that the new fees imposed on direct downloads and external payments run afoul of the law and fail to promote competition and fairness in the digital marketplace.
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