New EU rules will force Apple to allow Third Party Crypto and NFT Apps

Santa comes in early for crypto and NFT app developers as Apple prepares itself to comply with the ​​anti-monopolistic requirements. Under this new policy, users will be able to download apps outside the Apple app ecosystem which makes up a huge revenue point for the tech giant. Currently, the firm has stringent rules for NFT and crypto apps that need to comply with Apple’s app rules and regulations that help the tech firm accrue a whooping 30% profit via in-app purchases. 

Apple’s rules enforcement led to the blocking of Coinbase exchange on its app store. As Apple laid its term of collecting 30% of the trading fee from the exchange which was not a feasible or fair deal for Coinbase. The exchange also said that Apple disables NFT purchases on the exchange if it’s not done through Apple’s in-app purchases. 

Alex Salnikov, co-founder of NFT marketplace Rarible tweeted in response to the Apple and crypto app feud on December 14, 2022. 

Apple to allow alternative app stores.

Building a crypto app store is a great candidate for a VC backed startup with network effect and defensibility https://t.co/5f6hN3Rw16

— Alex Salnikov 🟡 Rarible (@insider0x) December 13, 2022

Apple’s step towards allowing third-party apps to operate through its app will become a fair act for the entire app gatekeeper ecosystem. If and when the firm complies to the EU act, the sales and engagement of crypto enthusiasts could skyrocket at least in the EU region. As per sources, the new policy will commence in 2023 and by 2024 it may become even more streamlined. 

One of the norms that Apple may lay down is a mandatory security check protocol to protect users against unsafe apps. While the EU would be able to break the monopoly and unfair practice of 30% fee collected by Apple, other regions will have to propose laws such as the proposed Open App Markets Act in the United States Congress from Senators Marsha Blackburn and Richard Blumenthal. The government officials of US and other countries have expressed their interests and have pushed for similar laws but haven’t reached near to what EU has. 

Read more: Bitcoin Price soars to $18000 

In the wake of Apple taming its app policy has bolstered tech stocks like Bumble and Spotify by 8.6 and 9.7%. While some tech stocks have surged, Apple’s stocks saw a slight dip. While the news of Apple changing its monopolistic policy as required by the new policy of EU which is dubbed as the Digital Markets Act has sparked rejoicing in the minds of tech firms and app developers, the fuller implementation will happen only by 2024.      

The act requires technology companies to allow the installation of third-party apps and let users more easily change default settings. The rules also demand that messaging services work together and developers get equal access to core features within apps and services. ​​The laws apply to tech firms with market valuations of a minimum €75 billion ($80 billion) and a minimum of 45 million MAU – monthly users within EU.

The transitions underway at Apple are being spearheaded by Andreas Wendker – software engineering vice president who reports to Craig Federighi, the company’s top software executive. Jeff Robbin –  top engineering manager and Eddy Cue are involved in the entire stimulation process. Apple is leveraging a significant amount of resources for this new endeavor. It hasn’t been nice to talk about the initiative at Apple, because the firm has always created a hue and cry for the need for “sideloading” — the process of installing software without using the official Apple App Store. 

Some engineers working on the plan also see it as a distraction from the typical day-to-day development of future features, according to the people. The company is aiming to be ready with the new policy updates as part of an update to next year’s iOS 17, which would be in line with EU requirements. 

Epic Games Inc., the maker of the popular game Fortnite, pursued legal combat with Apple over the hefty ‘App Store fees’. After Epic sought to relinquish the commission with Fortnite, Apple removed the game from its App store. Epic accused Apple of applying monopolistic practices, but a US court found that the firm didn’t violate federal antitrust laws.

Apple is working to open doors of its private application programming interfaces or APIs, to third-party apps. Those are the underlying frameworks that allow apps and features to interact with Apple’s hardware and core system functions. Currently, third-party web browsers, including ones like Chrome are required to use WebKit, Apple’s Safari browsing engine. Under the plan to meet the new EU law, Apple is considering removing this mandate.

The company hasn’t planned on how it will open iMessage and its Messages app to third-party services which is another requirement of the Digital Markets Act. Engineers at Apple believe that such a change could hamper the end-to-end encryption and other privacy features offered by iMessage. The company also isn’t currently considering integrating RCS, or rich communication services, a messaging protocol that Google and others are pushing Apple to adopt.

The EU, which includes France, Germany, Italy, and Spain among a total of 27 countries, has threatened fines of as much as 20% of a company’s annual global revenue if they repeatedly violate the law. Apple generated nearly $400 billion in worldwide revenue in fiscal 2022, which would put such a fine in the $80 billion range. Apple generated about $95 billion in revenue from Europe, which includes the EU and the UK, during fiscal 2022. That revenue base will likely take a hit when it makes the changes, which are poised to make the App Store less lucrative. Overall, though, Apple should be able to absorb the financial impact. The App Store makes up 6% of total revenue, and Europe’s contribution to that is likely less than 2%, according to Bloomberg Intelligence analysts Anurag Rana and Andrew Girard.

It wouldn’t be the first time Apple had to make major changes to abide by local laws. The company is also planning to use a USB-C connector on the next iPhones in 2023 instead of Lightning, also to meet an EU regulation. 

Source: Bloomberg