January 16, 2024 – In a recent development, Apple is reportedly planning to bifurcate its App Store in the coming weeks, segregating the European Union from the rest of the world to enable sideloading. This move, according to Mark Gurman’s latest report, is in compliance with the imminent enforcement of the Digital Markets Act (DMA) by the EU.
The DMA designates major tech firms such as Amazon, Apple, and Google as gatekeepers with significant market power. These companies will be obligated to refrain from abusing their dominant position by suppressing or acquiring competitors. Non-compliance could result in penalties of up to 10% of their annual turnover.
Among the key requirements of the DMA are provisions that prevent tech giants from locking users into their ecosystems, mandatory unbundling of pre-installed software, lifting restrictions on users’ ability to choose their preferred app stores, and ensuring interoperability between messaging services and other products.
With a deadline of March 7th set by the EU for compliance, Apple is facing pressure to open up its iOS App Store and enable interoperability between iMessage and Android. However, unlike its approach to USB-C, which saw a global shift, Apple seems reluctant to extend sideloading beyond the EU, highlighting the significant revenue generated by the so-called “Apple tax” on App Store purchases.
In previous submissions to the EU, Apple has warned that any reduction in commissions from the App Store could have a material adverse effect on its business, operating results, and financial condition. This cautionary note underscores the importance of the App Store as a lucrative revenue stream for the tech giant.
