Apple prepares to crack open iOS’ walled garden in Europe

Why it matters: Apple’s determination to keep iOS a secure and closed software platform has been controversial and new European laws threaten to force Cupertino to open it. Reports now indicate Apple will soon comply with those laws, fundamentally changing iOS as we know it.

Bloomberg’s sources report that Apple employees are laying the groundwork to eventually allow iOS and iPadOS users to install apps outside the App Store. The process could involve allowing third-party app stores, sideloading, or both. The company may initially only open its walled garden for users in European Union countries to comply with new legislation. Of course, operating two separate infrastructures could prove problematic.

Businesses and regulators have long criticized Apple’s role as the sole gatekeeper for all iPhone and iPad software, taking a 30-percent sales cut from all transactions on the platform. However, Apple continually defends its policy on user safety grounds, highlighting the relative lack of malware on iOS compared to other, more open operating systems.

The company’s impending reversal complies with the Digital Markets Act (DMA) the EU enacted in November. The new law prevents “gatekeepers” — businesses that control platforms where other companies operate — from locking clients and consumers into specific distribution channels or payment processors. The EU designed the legislation to stop Apple and Google from locking users into walled gardens.

However, the new European rules don’t immediately go into effect. The EU won’t formally apply them to companies like Apple or Google until the middle of 2023, and consequences for noncompliance wouldn’t take effect until 2024. Therefore, Apple’s changes might not arrive for a while.

Some businesses that operate heavily through iOS are already benefitting from the news. Spotify’s stock price rose by one and a half percent today. The music-streaming service currently doesn’t sell music directly through its iOS app because of Apple’s 30 percent commission. Distributing the app outside the app store would circumvent this problem. The same could be true of services like Bandcamp or Kindle, potentially costing Apple a lot of money.

Apple previously confirmed it would obey another new EU regulation forcing phones sold after 2024 to support USB-C. As a result, a future iPhone model will switch to USB-C from Apple’s proprietary lightning cables. Apple and Google have also opened up to third-party payment processors in response to South Korean and Denmark regulations.

It’s unclear when or if Apple could allow third-party app downloads beyond the EU’s jurisdiction. Lawmakers in the US previously proposed bills targeting Apple’s and Google’s control over mobile software, so something similar to the DMA could also force Apple’s hand on the other side of the pond.