Apple’s move to allow EU customers to download apps without using its app store paves the way for the Australian government to follow suit with its own legislation.
On Friday, Apple announced plans to overhaul the way apps work on iPhones and other iOS devices to allow more competition as part of a raft of changes designed to comply with the EU’s Digital Services Act.
The company will also allow iPhone users to choose a different browser from the default, and to use alternative payment systems to Apple Pay.
Apple did not answer questions about why other territories, including Australia, had been left out of the change, but indicated on Friday they were not changes it would have made if not required to by EU law.
Apple and Google have faced pressure from developers and regulators across the globe in recent years over restrictions and fees of up to 30% per transaction in their respective app stores.
In November 2022, the Australian Competition and Consumer Commission (ACCC) handed down recommendations as part of its long-running digital platforms inquiry. It advised the government to establish a code of conduct to address anti-competitive behaviour on the platforms, such as self-preferencing, unfair business dealings and impediments to interoperability and the ability for consumers to switch services.
In December last year, the Albanese government said it supported the recommendations in-principle, saying the regulator had presented a strong case for the code, with some platforms having entrenched market power in particular services.
However, the government said the framework would be a “significant undertaking” and tasked treasury with developing a potential legislative framework that would require “extensive consultation”.
The assistant treasurer and minister for financial services, Stephen Jones, said the government was in the process of finalising a consultation paper “for a potential competition regime and will have more to say shortly”.
In the December, the government said it was “closely monitoring international developments” and would ensure the developed framework was consistent and cohesive with overseas approaches.
Despite calls for changes to Apple’s model, the move has not been welcomed by some of its fiercest critics because developers who take advantage of the option will be charged a flat fee per app installation outside the app store.
Tim Sweeney, the CEO of Epic Games, labelled the announcement “hot garbage” in a post on X last week. Epic is in litigation against Apple and Google in Australia in relation to their app stores.
Spotify – which does not allow its customers to subscribe through their iPhone app – said Apple’s announcement showed the company does not believe the rules apply to them, and aspects, such as an annual fee per download of apps, amounted to “extortion” of developers.
“Spotify, like so many other developers, now faces an untenable situation. Under the new terms, if we stay in the App Store and want to offer our own in-app payment, we will pay a 17% commission and a 0.50 cent Euro Core Technology Fee per install and year,” the company posted on its blog last week.
“This equates for us to being the same or worse as under the old rules.”
Mozilla – the developer of the Firefox browser – told the Verge the changes make it as “painful as possible” for developers to offer an alternative to the Safari web browser.
A spokesperson for Apple said it was supporting the success of developers.
“We’re happy to support the success of all developers – including Spotify, which has the most successful music streaming app in the world. The changes we’re sharing for apps in the European Union give developers choice – with new options to distribute iOS apps and process payments,” the spokesperson said.
“Every developer can choose to stay on the same terms in place today. And under the new terms, more than 99% of developers would pay the same or less to Apple.”
The company pointed out that because Spotify currently does not allow users to subscribe through the iPhone app it currently doesn’t pay Apple anything. Apple said the company could continue to pay nothing under the new EU system, but that Spotify’s comments suggested the streaming music company wanted to offer new services without paying Apple for the value provided.
Epic Games’ case against Apple and Google in Australia alleges misuse of market power over the app stores’ ban of Fortnite due to it offering its own payment options. The case will be heard in the federal court across three months beginning in March. Epic won an antitrust lawsuit against Google in the United States late last year, but lost against Apple.
