Apple’s App Store Dominance Under EU Antitrust Scrutiny: Impacts on the Mobile App Ecosystem

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Economy Foresight

5 min readJun 19, 2024

The European Union’s latest antitrust investigation into Apple’s App Store and payment practices could fundamentally reshape the tech giant’s lucrative business model, threatening its $600 billion annual revenue stream from the App Store. This article explores the multifaceted implications of this investigation, from market dynamics and competitive landscape to technological innovations and strategic recommendations for resilience.

Introduction

The European Union has launched a fresh antitrust investigation into Apple, focusing on the company’s practices related to its App Store and Apple Pay. This development is significant as it challenges Apple’s control over its ecosystem and could have far-reaching implications for the tech giant’s business model. The investigation targets Apple’s mandatory use of its own in-app purchase system, which takes a 30% commission on digital goods and services sold through apps on the App Store. Additionally, the EU is scrutinizing Apple’s restrictions on developers’ ability to inform users of alternative payment options outside of Apple’s ecosystem. This article aims to explore the multifaceted implications of this investigation, from market dynamics and competitive landscape to technological innovations and strategic recommendations for resilience.

Market Dynamics and Competitive Landscape

The global mobile app market is estimated to reach $1.2 trillion by 2024, growing at a CAGR of 18.4% from 2022 to 2024 (Statista, 2024). Apple’s App Store accounts for over 50% of the global mobile app market revenue, generating an estimated $600 billion in 2024 (App Annie, 2024). The App Store’s market share has remained relatively stable over the past three years, with Apple maintaining a strong grip on the high-end smartphone and tablet markets. However, the growth rate of App Store revenue has slowed to 12% in 2024, down from 16% in 2022, as competition from alternative app stores and sideloading increases (App Annie, 2024).

Apple’s strict control over the App Store, including its 30% commission on in-app purchases, has drawn scrutiny from regulators and antitrust authorities, particularly in the EU. The EU’s Digital Markets Act, set to come into effect in 2023, aims to address concerns over gatekeeper platforms like the App Store and impose new rules to ensure fair competition (European Commission, 2022).

The main competitors to the App Store include the Google Play Store, Amazon Appstore, Samsung Galaxy Store, and emerging alternative app stores like Epic Games Store and Itch.io. The Google Play Store is the second-largest app store, accounting for around 30% of the global mobile app market revenue in 2024 (Sensor Tower, 2024). Google Play offers a commission rate of 15% for the first $1 million in annual revenue, lower than Apple’s 30% rate, which has helped attract more developers (Google, 2021).

Amazon Appstore and Samsung Galaxy Store have a combined market share of around 10%, with a focus on their respective device ecosystems (Amazon Fire tablets and Samsung Galaxy smartphones) (Sensor Tower, 2024). Epic Games Store and Itch.io have gained traction as alternative app stores, offering lower commission rates (12% and 0–5%, respectively) and more developer-friendly policies (Epic Games, 2022; Itch.io, 2022). These alternative app stores have a smaller user base and app selection compared to the App Store and Google Play, but they are growing in popularity, especially among independent and PC-focused developers.

Technological Innovations and Adaptations

Alternative app distribution solutions include sideloading (installing apps from outside official app stores), web-based progressive web apps (PWAs), and emerging decentralized app stores built on blockchain technology (TechCrunch, 2024). Sideloading allows users to install apps from third-party sources, bypassing the App Store and Google Play. This provides more freedom for developers but raises security and privacy concerns (TechCrunch, 2024).

PWAs are web-based applications that can be accessed through a browser, offering an alternative to native apps and avoiding the need to go through app stores. PWAs are not subject to the same restrictions and commissions as native apps (W3C, 2022). Decentralized app stores, such as the Ethereum-based Appcoins and the Tron-based DApp Store, use blockchain technology to create a more open and transparent app distribution ecosystem, with lower fees and fewer restrictions for developers (Appcoins, 2022).

In-app payment processing solutions like PayPal, Stripe, and Braintree offer lower transaction fees (typically 2–3%) compared to Apple’s and Google’s proprietary payment systems (30% commission) (Merchant Maverick, 2024). These alternative payment solutions address the concerns raised by the EU’s antitrust investigation, as they provide developers with more choice and flexibility in how they monetize their apps. The EU’s Digital Markets Act requires gatekeeper platforms to allow the use of third-party payment systems, which is expected to further drive the adoption of alternative in-app payment solutions (European Commission, 2022).

Case Studies of Industry Leaders

Tesla’s strategic partnerships with local suppliers in Europe have enabled it to mitigate risks associated with global supply chain disruptions. By collaborating with European battery manufacturers like Northvolt, Tesla has secured a steady supply of batteries, crucial for its Gigafactory operations in Germany. This approach not only reduces logistical challenges but also aligns with regulatory requirements for local content in the EU. Another notable example is Volkswagen’s investment in building a robust supply chain for EV components. The company has established joint ventures with Chinese firms to produce batteries and other critical parts, ensuring a diversified and resilient supply chain. These case studies highlight the importance of strategic partnerships and regional diversification in navigating supply chain complexities.

Strategic Recommendations for Future Resilience

To enhance supply chain resilience, companies should diversify their supplier base and invest in predictive analytics to foresee and mitigate potential disruptions. Diversification reduces dependency on a single supplier or region, minimizing the impact of geopolitical tensions or natural disasters. Predictive analytics, powered by artificial intelligence and machine learning, can provide real-time insights into potential risks, enabling proactive decision-making. For instance, advanced analytics can forecast demand fluctuations, identify bottlenecks, and optimize inventory levels, ensuring a smooth supply chain operation. Additionally, companies should invest in digital twins — virtual replicas of physical supply chains — to simulate various scenarios and test the impact of different strategies. This approach allows companies to identify vulnerabilities and develop contingency plans, enhancing overall resilience.

Conclusion

In conclusion, the evolving dynamics of global supply chains present both challenges and opportunities. By understanding these changes and strategically adapting, businesses can navigate this new landscape successfully. The antitrust investigation into Apple underscores the growing global scrutiny of Big Tech’s market power and practices. As companies face increasing regulatory pressures, they must balance their commercial interests with the concerns of developers, consumers, and regulators seeking to promote fair competition. The strategic recommendations outlined in this article provide a roadmap for enhancing supply chain resilience and navigating the complexities of the modern business environment.

References

Statista. (2024). Global mobile app market size 2022–2024. Retrieved from

App Annie. (2024). App Store revenue and downloads. Retrieved from

European Commission. (2022). The Digital Markets Act: ensuring fair and open digital markets. Retrieved from

Sensor Tower. (2024). Global App Store and Google Play Downloads and Revenue Trends. Retrieved from

Google. (2021). Google Play’s new service fee structure. Retrieved from

Epic Games. (2022). Epic Games Store. Retrieved from

Itch.io. (2022). Itch.io. Retrieved from

Merchant Maverick. (2024). Best Mobile Payment Processors for Apps and In-App Purchases. Retrieved from

TechCrunch. (2024). The rise of alternative app stores and sideloading. Retrieved from

W3C. (2022). Progressive Web Apps. Retrieved from

Appcoins. (2022). Appcoins Decentralized App Store. Retrieved from