Apple Giving Ground on App Store Rules to Appease Regulators

SAN FRANCISCO — Governments around the world have pressured Apple with laws and lawsuits that aim to loosen its grip over the digital economy. Now, the tech giant is beginning to make concessions that could change people’s iPhone experience.

In Europe, where a new law permits third-party app stores and app promotions, Apple has approved a competing app store from Epic Games, the maker of Fortnite, and permitted the streaming app Spotify to list its summer pricing discount inside its music streaming app, Epic and Spotify said Wednesday.

In the United States, where a Justice Department lawsuit accuses Apple of creating a smartphone monopoly, the company said Wednesday that it would allow apps to use its contactless transaction technology, the NFC chip, to provide customers with in-store payments, hotel keys and rewards cards.

The changes are among the first examples of how Apple is opening up the iPhone. The company has spent much of the past year testing the boundaries of how far it must go to satisfy the demands of government authorities. It has introduced alternative fees, developed new processes for collecting commissions and added warnings for customers who download third-party app stores.

App developers say Apple’s changes still show that the company is more interested in protecting its business than complying with the law. Governments have responded to that criticism by intensifying their scrutiny of Apple’s business.

In June, the European Commission charged Apple with violating the 2022 Digital Markets Act, which gives regulators the authority to force tech giants to change their business practices. In May, Apple returned to federal court in California to defend its requirement that app developers pay it a 27% commission of sales through alternative payment systems, which developers say violates a federal judge’s order to offer other ways to pay for services.

“It does appear to me that their strategy is to try to wear down regulators,” said Tim Sweeney, CEO of Epic Games, which largely lost a 2020 lawsuit it filed against Apple for antitrust violations.

Apple has said it complies with the law in Europe and faces a competitive marketplace. It says its rules and fees are a fair trade for providing access to billions of iPhone customers. In the past, the company accused vocal critics including Epic and Spotify of benefiting from its software tools while not paying money in commissions for years.

“The Digital Markets Act required us to enable new capabilities for developers in the European Union, and we have worked to make them as easy as possible for users while also trying to protect their privacy and security,” an Apple spokesperson said in a statement.

Epic started planning its new app store in 2022. This year, Apple approved, terminated and then restored an account for Epic Games Sweden, the company’s Swedish subsidiary, to gain access to the software tools necessary for the release.

The Epic Games Store was available for download Friday. It features Epic’s own games initially, including Fall Guys, Rocket League Sideswipe and Fortnite, but will be open to other gamemakers, which will pay Epic a 12% commission on sales.

During a media briefing Wednesday, Sweeney said Apple had created a “scare screen” that warns iPhone users in Europe who go to download the store that installing a third-party store isn’t allowed by their operating systems. It takes about 15 steps to complete the download, which he said was intentional.

“Apple can make screens that are incredibly easy and intuitive and natural,” Sweeney said. “The fact that they made this so horrible just shows malicious intent.”

An Apple spokesperson said the download process wasn’t cumbersome and added that the process takes fewer steps than Epic detailed in its media briefing.

On Wednesday, Spotify said it would begin displaying its summer promotional pricing for subscriptions in its app in Europe. It said it was able to do so after the European Commission found that Apple had violated antitrust laws and fined it nearly $2 billion for blocking music streaming services from showing promotions in their apps, among other things. But Spotify said Apple still prevented it from including a link to make purchases in the app without being charged a fee.

Apple has responded to criticism about linking out for purchases with new fees. It said this month that apps in Europe could provide links but would have to pay a 5% “acquisition fee” on a sale and a 20% “store fee.” Combined, the fees would equal up to a 25% commission on sales for some developers.

“They’re determined not to lose a dime of revenue,” said Gene Burrus, the global policy counsel for the Coalition for App Fairness, a Washington trade group with nearly 80 members, including Spotify and Match Group.

On Wednesday, Apple said it would make the technology behind its tap-and-go service available to app developers in the United States, Australia, Brazil, Canada, Japan, New Zealand and Britain. It said developers would have to opt into a new set of terms and fees. An Apple spokesperson declined to disclose the terms or fees.

This article originally appeared in The New York Times .