Europe’s Digital Markets Act: How it Changes Tech Globally

For over a decade, the iPhone operated as a “walled garden.” If you wanted an app, you downloaded it from the App Store. If you wanted to pay for a subscription, you used Apple’s payment system. However, the enforcement of the Digital Markets Act (DMA) in March 2024 forced Apple to dismantle parts of this wall within the European Union. This legislation is reshaping the global technology economy and raising questions about whether American users will eventually see the same freedoms.

Understanding the Digital Markets Act

The Digital Markets Act is a piece of antitrust legislation passed by the European Union intended to ensure fair competition. It targets specific large tech companies labeled as “gatekeepers.” These are companies with a market capitalization of at least €75 billion and over 45 million monthly active users in the EU.

The list of gatekeepers includes Alphabet (Google), Amazon, Apple, ByteDance (TikTok), Meta (Facebook), and Microsoft. The law prevents these companies from favoring their own services over third-party rivals. For Apple, this meant significant changes to how iOS operates in 27 European countries.

What Changed for Apple Users in the EU?

Starting with the release of iOS 17.4, Apple introduced three major changes for users in the EU to comply with the DMA:

Alternative App Marketplaces: Users can now download app stores created by third-party developers. This allows for the installation of apps that might not meet Apple’s strict App Store guidelines. Notable examples include AltStore PAL, created by developer Riley Testut, and the Epic Games Store, which brought Fortnite back to the iPhone in Europe.
Alternative Browser Engines: Previously, all browsers on iOS (including Chrome and Firefox) had to use Apple’s WebKit engine. They were essentially Safari skins. Now, developers can use their own engines, such as Google’s Blink or Mozilla’s Gecko, allowing for faster performance and distinct features.
Payment Processing Freedom: Developers can now use third-party payment processors within their apps. They are no longer forced to use Apple’s in-app purchase system, which historically took a commission of 15% to 30%.
NFC Access: Apple opened up the Near Field Communication (NFC) chip on the iPhone. This allows third-party banking and wallet apps to facilitate “tap to pay” transactions directly, bypassing Apple Wallet and Apple Pay.

The Cost of Freedom: Apple's Core Technology Fee

While Apple complied with the law, they introduced a controversial business term known as the Core Technology Fee (CTF). Apple argues that even if developers do not use the App Store, they still benefit from Apple’s intellectual property and platform tools.

Under the new EU business terms:

Developers pay a reduced commission of 10% to 17% on digital goods (down from the standard 30%).
If a developer chooses to use a third-party payment processor, they pay an additional 3% fee to Apple.
The CTF: Developers must pay €0.50 for every first annual install per year after they cross a threshold of one million installs.

This specific fee structure drew criticism from companies like Spotify and Epic Games. They argue that the fee makes it financially impossible for “freemium” apps to leave the official App Store. If a free app goes viral and gets 2 million downloads, the developer could owe Apple €500,000 despite earning zero revenue.

Will the United States Follow Suit?

The changes in Europe have fueled a debate in the United States regarding digital rights and antitrust enforcement. While US consumers do not currently have access to alternative app stores, regulatory pressure is mounting.

The Department of Justice Lawsuit

In March 2024, the US Department of Justice (DOJ), joined by 16 state and district attorneys general, filed a civil antitrust lawsuit against Apple in the US District Court for the District of New Jersey.

The lawsuit alleges that Apple illegally maintains a monopoly over the smartphone market. The complaint mirrors several issues addressed by the DMA, including:

Blocking “super apps” that could host mini-programs.
Suppressing cloud streaming game apps (like Xbox Cloud Gaming).
Degrading the quality of messaging between iPhone and Android (green bubbles).
Limiting the functionality of third-party smartwatches with the iPhone.

Legislative Efforts

Beyond the courts, Congress has considered legislation similar to the DMA. The Open App Markets Act was a bipartisan bill introduced to force Apple and Google to allow sideloading and alternative payment systems. While the bill passed the Senate Judiciary Committee, it has faced stalling tactics and has not yet become law.

The “Brussels Effect”

There is also a phenomenon known as the “Brussels Effect,” where multinational corporations standardize their products globally to meet strict EU regulations because it is easier than maintaining different versions for different regions.

However, Apple has invested heavily in “geofencing” these features. The company checks the device location, billing address, and iOS settings to ensure only users physically located in the EU can access alternative marketplaces. Apple has made it clear they will not voluntarily expand these changes to the US without a legal mandate.

Global Ripple Effects

The DMA is inspiring other nations to draft their own digital competition laws.

Japan: The government is preparing legislation requiring Apple and Google to allow third-party app stores and billing systems.
United Kingdom: The Digital Markets, Competition and Consumers Bill aims to give the UK Competition and Markets Authority (CMA) powers to regulate big tech in a similar fashion.

While the “walled garden” remains standing in the US for now, the bricks are loosening. The outcome of the DOJ lawsuit, which could take years to resolve, will likely determine if American iPhone users will ever see the same freedoms currently enjoyed by their European counterparts.

Frequently Asked Questions

Can I use a VPN to access EU app stores in the US? No. Apple uses on-device location checks, billing addresses associated with your Apple ID, and carrier data to verify your location. A VPN is not sufficient to bypass these restrictions.

Is sideloading dangerous? Sideloading carries more risk than using the App Store because apps are not subject to Apple’s strict content review. However, in the EU implementation, Apple still requires a process called “Notarization.” This is an automated check for malware and security threats before an app can run on an iPhone, even if it comes from an alternative store.

What is the difference between the DMA and the DOJ lawsuit? The DMA is “ex-ante” regulation, meaning it sets rules beforehand that companies must follow to avoid fines. The DOJ lawsuit is “ex-post” enforcement, meaning the government is suing Apple for alleged past and current illegal behavior. The lawsuit must prove harm in court, whereas the DMA simply mandates compliance.

Did the DMA force Apple to adopt RCS messaging? Technically, no. The EU investigation concluded that iMessage was not a “dominant” enough platform in Europe to fall under the gatekeeper rules. However, Apple announced support for RCS (Rich Communication Services) in iOS 18, likely to head off further regulatory scrutiny in China and the EU.