A new European competition law will be forcing companies, like Apple, to open up apps outside of its own App Store.
👉 Background: Apple will forever be know as the GOAT of all slick devices. From the Macintosh computer in the 80’s to the OG iPod and of course iPhone, iPad, Airpods, Apple watch and a whole heap of other products.
👉 What happened: While many of these products are hardware, Apple has also been building up its fair share of revenue from software (21% of its revenue in Q3 2022). Much of this software revenue comes from App Store commission where Apple charges apps 30% commission on standard purchases.
👉 What else: But a new European competition law, called the Digital Markets Act, which will roll out in in a few months, will force companies, like Apple, to open up apps outside of its own App Store. This could threaten Apple’s ‘walled garden’ and the billions of dollars in revenue it collects.
💡A walled garden is a closed platform or ecosystem where the the owner of the platform has total control. For Apple, this new law means their walled garden could falling down - to give consumers choice.
💡Although Apple claims that this ecosystem or 'walled garden' approach is in its consumers' best interests, it actually reduces consumer choice and eats into the margin of businesses with apps in the Apple ecosystem.
💡So it’s no surprise that after this announcement the shares of popular apps, like Bumble were up 8.6% and Spotify were up 9.7%.
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