EU Customers Can Now Install iPhone Apps From Third-Party Stores

A significant shift is underway in the European Union's mobile app landscape. For the first time, iPhone users in the 27 EU member states can legally download and install applications from sources other than Apple's official App Store. This change, mandated by the EU's landmark Digital Markets Act (DMA), represents a major crack in the 'walled garden' ecosystem Apple has carefully cultivated since the iPhone's inception, potentially reshaping app distribution, developer economics, and user choice within the bloc.

Implemented through iOS software updates starting with version 17.4, the changes allow users physically located in the EU to download alternative app marketplace apps directly from a developer's website. Once installed and granted permission, these marketplace apps function similarly to the original App Store, enabling users to browse and install other applications.

This move marks a compliance effort by Apple, designated as a 'gatekeeper' under the DMA alongside other tech giants, which aims to foster fairer competition in the digital sector. The rules require these gatekeepers to open up their platforms and services to other companies and developers. iPadOS was also later designated under the DMA, requiring Apple to implement similar changes for its tablet operating system starting with iPadOS 18.

A New Era for App Distribution

The technical adjustments made by Apple to comply with the DMA are substantial, involving over 600 new Application Programming Interfaces (APIs) and expanded analytics tools for developers. These changes enable the creation and operation of alternative app marketplaces and, more recently with iOS 17.5, allow developers to offer apps for direct download from their websites, bypassing any marketplace entirely. This capability, however, is currently limited to developers meeting certain criteria regarding app install volume and standing with Apple. Users initiating a download from a website or an alternative marketplace are presented with system prompts informing them that the app originates from outside the Apple App Store.

Several alternative marketplaces have already begun to emerge in the EU. Setapp Mobile, an extension of a popular Mac app subscription service, launched in beta, offering a curated selection of apps for a monthly fee. AltStore PAL, another early entrant, focuses on independent developers and uniquely uses Patreon integration for monetisation, charging a small annual fee to cover Apple's fees. Aptoide, a long-standing Android alternative store, has also launched an iOS version focused initially on games. Big players like Epic Games, a vocal critic of Apple's App Store policies, have also announced plans to launch their own marketplace, potentially bringing popular titles like Fortnite back to iPhones in the EU after a years-long absence.

Opportunities and Challenges

The opening of the iOS ecosystem presents potential opportunities. Developers could benefit from increased distribution channels and potentially lower commission fees compared to Apple's standard 15-30% cut, though Apple has introduced new fee structures for those opting into the DMA-compliant terms. Users, in theory, could gain access to a wider variety of apps, including those previously not allowed on the App Store due to Apple's stricter guidelines, and potentially lower prices resulting from increased competition. Developers can also now use alternative payment processors within their apps or link out to their websites for purchases, avoiding additional Apple fees under certain conditions.

However, this new openness is not without significant challenges and concerns. Apple itself has voiced apprehension about the potential impact on user privacy and security, stating these changes are being limited to the EU precisely because of these risks.

The meticulously vetted environment of the official App Store provides a level of trust and safety that may be harder to guarantee on third-party platforms. Concerns linger about the potential proliferation of apps containing malware, scams, fraudulent schemes, or problematic content that might bypass platform safety rules.

This could include potentially exploitative applications like certain apps that act as an AI girlfriend or gambling services previously barred from the main App Store appearing on these less regulated marketplaces. Apple maintains some oversight through a 'Notarisation' process for all apps, which includes automated checks and some human review, aiming to mitigate baseline security risks but not policing content to the same extent as the App Store. Users downloading from alternative sources will have limited support options from Apple for issues related to these apps.

Apple's Response and the Road Ahead

Apple's compliance with the DMA hasn't been without friction. While allowing alternative marketplaces and payment systems, the company introduced a new set of business terms for developers choosing these options in the EU. This includes reduced commission rates (10% or 17% instead of 15% or 30% for App Store sales) but also introduces a controversial 'Core Technology Fee' (CTF). This fee charges developers €0.50 per first annual install for apps exceeding one million installations per year, regardless of whether the app is free or paid. Marketplaces themselves pay the CTF for every install. While Apple later adjusted the CTF to exempt completely non-revenue generating apps and provide a three-year on-ramp for small developers, the fee structure has drawn heavy criticism from developers and regulators.

The European Commission has already launched non-compliance investigations into Apple's implementation. Preliminary findings suggest Apple's rules still unduly restrict developers from freely directing users to alternative offers ('steering'). Furthermore, the Commission is investigating whether the new contractual requirements, particularly the Core Technology Fee and the multi-step user journey required to install alternatives, effectively undermine the DMA's goal of ensuring contestability and fairness.

The potential fines for non-compliance are steep, reaching up to 10% of a company's global annual turnover. The outcome of these investigations and the ongoing dialogue between Apple, developers, and EU regulators will significantly shape the future evolution of the app ecosystem in Europe.

For now, iPhone users in the EU are stepping into uncharted territory. They have newfound freedom to explore apps beyond Apple's curated selection, but must also exercise greater caution regarding security and privacy. Whether this regulatory push genuinely levels the playing field or merely creates a more complex, potentially riskier environment remains to be seen. The EU experiment serves as a closely watched test case, potentially influencing digital market regulations worldwide.