App Marketing

Digital Markets Act (DMA) Consequences for Apps

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In early 2022, the European Union (EU) adopted the Digital Services Act. Under this law, various major platforms must comply with a range of new obligations. The law is designed to help tackle disinformation more effectively among major tech companies.

The EU has recently designated the first companies as 'very large online platforms' that fall under this legislation. With 100 million active users, Apple certainly qualifies with its various online platforms.

What does this mean for Apple? Well, Apple is now required to publish the average number of active users of its services, including the iOS App Store, iPadOS App Store, and Apple Books. They've just released these figures:

  • iOS App Store: 101 million
  • iPadOS App Store: 23 million
  • macOS App Store: 6 million
  • tvOS App Store: 1 million
  • watchOS App Store: under 1 million
  • Apple Books: under 1 million
  • Podcasts paid subscriptions: under 1 million

These figures are calculated as an average over a six month period ending January 31, 2023. Apple will be required to update this information on a regular basis.

Making these figures public is significant, as it provides greater transparency into Apple's performance in the European market. It's also expected to have a positive impact on App Store Optimization.

Major platforms covered by this law are required to undergo external audits, implement additional risk management measures, share data with authorities and researchers, establish a code of conduct, and be transparent about their recommendation algorithms.

These rules apply to platforms with more than 45 million monthly active users within the European Union. The law takes effect on August 25, 2023.

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What is the Digital Markets Act (DMA) and what does it mean for app developers?

The Digital Markets Act (DMA) is European legislation that designates major tech companies like Apple and Google as gatekeepers, compelling them to ensure fairer competition within the European Union. For app developers and publishers, this means greater freedom to offer alternative payment methods, direct users to external websites, and distribute apps through alternative marketplaces. This breaks the traditional monopolies of the App Store and Google Play Store, opening up new avenues for in-app monetization and direct customer communication.

How does the DMA impact in-app purchases and the commissions charged by Apple and Google?

The DMA requires gatekeepers to allow developers to integrate external payment systems outside of Apple and Google's official in-app purchase systems. This enables developers to reduce or bypass standard commission rates of 15% to 30%. However, companies like Apple have introduced new fee structures, including the Core Technology Fee, which require businesses to carefully calculate whether switching to alternative payment providers or external landing pages is financially advantageous for their specific business model.

What are the key opportunities and risks of the DMA for app distribution?

The greatest opportunity presented by the DMA is the ability to reach users through alternative marketplaces and direct web-to-app installations, without being bound by the strict guidelines and margins of major app stores. The primary risk lies in the increased complexity surrounding conversion and consumer trust. Users may sometimes need to complete extra steps to install an app from outside the official store or to make payments, which can create friction. This requires companies to invest more in brand awareness and frictionless onboarding funnels.

How does Coffee Digital help companies seize opportunities and mitigate risks under the DMA?

Coffee Digital helps app publishers strategically navigate the evolving regulations of the Digital Markets Act. Our specialists conduct in-depth cost-benefit analyses to determine whether switching to alternative payment models or distribution channels is commercially viable for your app. By building powerful web-to-app funnels, seamlessly adapting onboarding processes for external payments, and optimizing campaign structures, we ensure you turn these regulations to your advantage and achieve maximum revenue growth within the European market.