Last week Apple announced changes to the terms of service for developers and others seeking to be part of the iPhone ecosystem. These changes, implemented for European Union (EU) citizens as part of the compliance requirements under the EU’s Digital Markets Act (DMA), created a brief moment of hand wringing on X (formerly Twitter) by talking heads and the handful of companies seeking to renegotiate Apple’s service fees. Ultimately though, the vast majority of mobile app developers replied with a collective “wait and see.”

This response wasn’t disapproval of Apple, or anger at the European regulators. Instead, it’s a commentary on two things. First, developers were never clamoring for alternative app stores. And second, it reflects the fact that building a successful ecosystem takes a lot more than a vote in parliament or rules promulgated by agencies. The mere regulatory mandate for platforms to allow third-party app stores doesn’t magically create an app store; creating a successful app store takes work. About 88 percent of existing apps in Apple’s App Store don’t use Apple’s payment mechanism to make money, and all but a tiny fraction of the ones who do pay 15 percent, a rate that polling shows is considered reasonable. The idea that developers can shave 3 percent off their cost by using an alternative payment scheme isn’t worth it when they currently pay nothing at all beyond a nominal developer fee.

So, if most developers won’t see an economic gain from DMA implementation, is there any upside at all? The answer is that it depends on what happens next. Apple has opened the door to alternative app stores. It’s worth noting here that a similar version of what has been implemented by Apple is available on Europe’s most popular platform, Android, but hasn’t borne fruit. Android has allowed third-party stores in the EU for years, so the opportunity and conditions have long existed for there to be a thriving marketplace of app stores. And yet, the only nation in which such a diversity of app stores has proliferated on Android is China and that’s because China has banned the Google Play store on Android devices. So, why have third-party stores failed everywhere else?

Because for developers, there are four things that they need from any successful ecosystem:

  1. Offloading overhead. Developers are not packaging experts, printing experts, international trade experts, tax experts, or privacy lawyers. Oftentimes they aren’t even particularly good at marketing! Therefore, any successful ecosystem needs to provide a bundle of services that fill all the important business elements that take time away from writing code. Unbundling might sound good, but it’s the ease of the bundle itself that saves time, and time is the most valuable resource for a developer. Apple does this part incredibly well, and any unbundled competitors will need to make it so seamless and interoperable that it’s indistinguishable from a bundled package. The logistics alone are daunting. If a developer has to utilize ten different unbundled services just to ship an app, that alone might push them in Apple’s direction!
  2. Instantaneous trust. There is a lot of talk out there about how PCs and Macs currently allow for apps to simply be downloaded and installed from any website. For most developers, this ends up being a flaw not a feature. Because when you are just a small developer hanging your app out on a random website, no one trusts it. Developers have to spend huge money up front on search engine optimization, display ads, marketing campaigns, and more. Today, consumers rely on Apple and Google’s app stores’ vetting processes and install on a whim. Any store that wants to break through must first be a brand that consumers trust, and they will have to maintain that trust for the long haul – which is not a cheap proposition.
  3. Access to a global marketplace. Much of the success of the App Store is how it enables instant access to billions of users. Without this, the cost of entering each new country or region has to wait while cash flow comes in. A successful store allows apps to be available in every market with a couple of clicks. With DMA, depending on how the ecosystem is divided up between app marketplaces, developers may need to hit “publish” several times and do a lot more work just to get to the publish button for each app store. Any new app store must be able to demonstrate reach; new app stores must have customers who are motivated to download.  These customers may also be more reluctant to hit “download” if they’re on a store with all the copyright theft and malware problems that are much more easily avoided and simply not a concern on the platform’s own app store.
  4. Developer tools. All the elements above depend on an easy (and frankly exciting) set of tools, well documented APIs, constantly improving hardware features, and more. Apple, Google, Microsoft, Salesforce, and others all spend billions each year to develop and disseminate great tools for their platforms. For any new app store to succeed, the tech must be superior and trustworthy.

Without those basic building blocks, no amount of government regulation can force developers to build products for a new store. And that raises an important point: the EU must not set the test of DMA’s success to “X number of third-party app stores have been created.” That’s a doomed proposition. Android has been open to third-party stores and sideloading for ages, and yet developers published to Google Play because it had the killer four pillars listed above. If the EU wants new stores to develop, then it’s going to have to understand that what attracts developers is happy, trusting customers; and for these new app stores to survive, they will need to build and support an ecosystem that keeps those customers coming back.

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