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Apple retreats in fight to defend App Store in Europe

Apple has made a major concession in its battle to protect the dominance of the App Store on iPhones and other devices in Europe, saying developers will be free to distribute its apps directly to consumers.

The company announced the change to comply with the European Union’s Digital Markets Act (DMA), which came into effect last week.

The move could dent the high profit margins and steady stream of revenue that Apple has come to rely on from its App store, where developers are charged fees of up to 30%.

The changes, which only affect the EU, come amid continuing criticism from rivals that the tech company’s compliance efforts are falling short.

Beginning this spring, software developers operating in Europe will be able to distribute apps to EU customers directly from their own websites instead of through the App Store.

They must still meet terms and conditions set by Apple and be authorised developers.

The company has also introduced a “core technology fee” of 50 cent per user account each year, even if developers opt not to use Apple’s App Store or payment system.

The DMA aims to rein in Apple, Amazon, TikTok owner ByteDance, Meta Platforms, Alphabet’s Google and Microsoft and create a level playing field for smaller rivals and ultimately more competition for Europeans.

“To reflect the DMA’s changes, users in the EU can install apps from alternative app marketplaces in iOS 17.4 and later.

“Users will be able to download an alternative marketplace app from the marketplace developer’s website,” Apple said on its website.

IOS refers to the software platform that runs its iPhones and iPads.

Developers who use Apple’s App Store are charged fees of up to 30%

The opening in Europe of Apple’s ecosystem – which the company has long guarded as a highly profitable “walled garden” – comes at a sensitive time for the tech firm.

The iPhone maker is struggling with shrinking revenue and weak demand for its smartphones in China.

In January, Microsoft dethroned Apple as the world’s most valuable company, with investors viewing it as lagging its rivals in their race to dominate artificial-intelligence technology.

The changes announced by Apple include allowing developers to set up alternative marketplaces to offer a catalogue solely made up of their own apps with immediate effect.

Developers can choose how to design in-app promotions, discounts and other deals when directing users to complete a transaction on their website instead of using Apple’s template.

Under pressure from regulators and the DMA, Apple last week took a step back in its feud with Epic Games, allowing it to put its own game store on iPhones and iPads in Europe.

DMA violations can cost companies fines as much as 10% of their global turnover.

Apple has also said it will appeal an EU antitrust fine of €1.84 billion handed to it last week for thwarting competition from Spotify and other music streaming rivals via restrictions on the App Store.

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