In the European market, the iPhone is about to bid farewell to the era when applications can only be installed through the AppStore. Recently, Apple announced on its official website that in compliance with the Digital Markets Act (DMA), it will make changes to iOS, Safari browser and AppStore in the European Union, and will open up developers and enterprises to use third-party payment channels and build third-party application markets on the iOS platform.

For Apple, this seems to be a huge compromise, because previously the distribution and service charges for iOS applications could only be through the AppStore.

According to the latest data officially released by Apple, AppStore developers' business and sales in the AppStore ecosystem will reach US$1.1 trillion in 2022, including sales of physical goods and services, in-app advertising, digital goods and services, and others such as consulting and data analysis services.

Economists at Analysis Group estimate that developers will generate $109 billion through in-app advertising in 2022, and digital goods and services will generate $104 billion in billings and sales.

It is understood that the app sharing ratio between Apple and developers in the App Store is 30/70, that is, developers get 70% of the revenue and Apple gets 30%. This fee is nicknamed the "Apple tax."

Although Apple will open third-party app stores to the iOS system and third-party payment channels in order to cooperate with the EU's Digital Market Act (DMA) that will take effect in March, this does not mean that Apple will give up this part of its interests.

According to calculations, for some developers and enterprise users with larger transaction volumes and downloads, using third-party app stores and payment channels will actually pay more to Apple.

In this regard, companies including Epic and Spotify have said that Apple's new regulations are a "malicious compliance behavior" and "naked extortion."

The European Commission said it would respond to Apple's changes when the regulations officially come into effect in March and promised: "Strong action will be taken if Apple's proposed solution is not satisfactory."

The unavoidable "Apple tax" has become more severe after opening up

For iOS developers and companies in the EU, Apple has set three new business terms:

1. The AppStore commission rate has been reduced from 30% to 17% (the preferential rate for small and medium-sized developers and subscription services has been reduced from 15% to 10%)

2. iOS apps issued through the App Store can use the payment processing function of the App Store after paying an additional 3% handling fee; developers can also use payment service providers within their apps, or guide users to their websites through links to process payments, without paying additional fees to Apple.

3. The most critical point is that regardless of whether the App is released on the App Store, as long as the first installation of the App exceeds 1 million times, Apple will charge 0.5 euros for each first installation per year.

Apple has also set up a calculator at the bottom of the webpage to help developers calculate the payment situation under different circumstances. Here is NetEase’s game “Egg Boy Party” as an example:

According to Qimai data, since its launch in May 2022, as of March 9, 2023, the cumulative downloads of "Egg Party" on the iPhone have reached 21 million, and the in-app purchase revenue is estimated to be US$66 million (equivalent to RMB 456 million).

Calculated based on the current 30% “Apple tax”,Developers need to pay Apple $1.65 million per year; If you choose a third-party application market and a third-party payment channel, only the core technology fee will be included.NetEase will need to pay US$906,000.

Take PayPal and Stripe, common payment channels in Europe and the United States, as examples. The handling fees for a single transaction between them are between 2.9-4.4%.NetEase still needs to pay at least US$1.914 million in payment channel fees.

Calculated to this point, the fees paid by NetEase have reached 2.82 million U.S. dollars, which has far exceeded the current "Apple tax" of 1.65 million U.S. dollars. In fact, this does not include the channel fees paid for listing in third-party application markets.

One developer believes: "Charging by download is a very stupid design. If a large number of zombies are deployed to constantly switch accounts and install competitors' apps, competitors will lose money."

Epic Games CEO Tim Sweeney said: "Apple's plan to block Europe's new Digital Markets Act is a cunning and malicious compliance act."

Spotify CEO Daniel EK believes that "Apple's new rules are a cover for dealing with the Digital Market Act and a "complete farce." He also accused Apple of this new tax policy being naked "blackmail" and called on EU regulators to take action.

At the same time, there are reports that Apple stated that if developers do not switch to "new business terms", that is, they do not bypass the App Store, they do not need to pay "core technology fees."

Openness also has entry barriers

In addition, for developers and enterprises, opening up third-party application markets and third-party payment methods does not mean that they can obtain the same freedom in the iOS system as on the Android platform.

Judging from the announcement, Apple has put forward three core requirements for the third-party application market:

1. Third-party app stores must be established in accordance with Apple’s API framework. App display and distribution must follow the AppStore format, declare the core functions of the App, and disclose the use of user data.

2. Third-party app stores still need to cooperate with Apple in app review and subsequent app distribution policies, but Apple will not check the content of the app. At the same time, users can only download and install applications through the app store, but cannot install applications through the "application installation package".

3. Any company that wants to build an app store on iOS must first provide Apple with a credit certificate of 1 million euros from an A-level financial institution or S&P, and must renew this every year.

In an interview, a developer told reporters: "It seems that Apple has opened up access to third-party application platforms, but in fact App review is still in Apple's hands. Only apps that cannot be put on the App Store due to content violations and some game developers like Epic benefit."

Since there is no need to consider the cost and scrutiny of putting an app on the shelves, some experts interviewed believe that users seem to be the real beneficiaries.

Jiang Han, a senior research fellow at Pangu Think Tank, believes: "For users, the activation of third-party application stores may bring more choices and a richer application experience. Users can download and update applications through more channels, which helps to improve the usability and convenience of applications."

Yuan Shuai, deputy secretary-general of the Zhongguancun Internet of Things Industry Alliance, believes that third-party application stores may consider potential risks while giving users more.

He told reporters: "The emergence of third-party app stores may bring some security risks and bad applications. In addition, users may need to spend more time and energy to manage and update multiple app stores."

However, only users in the EU may benefit.A developer told reporters: "The mobile phone can determine the country and region the user is currently in by reading the IMSI (International Mobile Subscriber Identity) of the SIM card and scanning the surrounding Wi-Fi frequency bands, because the Wi-Fi frequency bands enabled in different countries and regions are also different. It is difficult for users to directly bypass supervision and pretend to be users in the EU."