Apple will allow third-party app stores in the EU for iOS 17.4, but their developers must provide a “letter of credit” for 1 million euros

With the release of iOS 17.4, Apple will offer iPhone and iPad users in the EU the ability to download and install apps from alternative app stores outside of the App Store. These alternative marketplaces will function as iOS apps that can install other iOS apps on the iPhone or iPad. Developers can create their own app stores, as long as they meet Apple’s standards for user experience, fraud prevention, and customer support.

With the new update, developers submitting apps to Apple for distribution in the EU can choose to publish them on the App Store, in alternative stores, or both. Apps installed from these alternative marketplaces will be subject to security checks, similar to the way Mac apps are currently checked.

However, in a document on its website, Apple notes that anyone who wants to create an alternative app store will have to provide evidence that they can financially “guarantee support for developers and customers.”

“In order to create adequate financial means to guarantee developer and customer support, marketplace developers must provide Apple with a standby letter of credit from an A-rated financial institution (or equivalent rating from S&P, Fitch, or Moody’s) in the amount of €1,000,000. It will need to be automatically renewed every year,” Apple’s terms and conditions say.

It is worth noting that Apple will not charge a fee for applications installed through alternative stores or through alternative payment systems. Developers can integrate alternative payment systems into their apps or link to their websites to make purchases. However, after the first million installed applications, a Core Technology Fee of €0.50 will be charged for each installation per account per year.

Apple is also reducing commission rates for developers who continue to distribute their apps through the App Store. The standard 30% commission will be reduced to 17%, and the 15% commission for subscriptions older than one year or for small businesses will be reduced to 10%.

Developers in the EU have the option of adhering to the current App Store terms or accepting the new business terms, which include reduced fees, access to alternative app stores, and the Core Technology Fee. For those who use Apple’s integrated payment system, the new terms provide for an additional 3% payment processing fee.

These changes are part of Apple’s compliance with the European Union’s Digital Single Market Act and are aimed at opening up the app market and providing more choice for consumers and developers. The iOS 17.4 update is currently available in beta, with a public release scheduled for March.