Brazilian Regulators Force Major App Store Changes: Third-Party Stores and New Fees Coming to iPhone

Brazil’s competition authority has ordered Apple to overhaul its App Store rules for iPhone users. The Administrative Council of Economic Defense (CADE) approved a binding settlement with the tech giant this week. The changes will break Apple’s long-held control over app distribution and payments.

This decision resolves an antitrust investigation opened in 2022. According to Reuters, regulators scrutinized whether Apple’s rules stifled competition. The new terms will fundamentally alter the iOS experience for millions of Brazilian users.

Breaking Down the New Rules and Commission Structure

The settlement mandates several key changes. Apple must now permit third-party app stores on iOS devices in Brazil. Developers will also gain new freedoms regarding payments.

They can use alternative payment processors inside their apps. They can also link directly to external websites for purchases. Apple may show informational warnings but cannot create undue barriers.

A new fee structure accompanies these changes. Reports from Brazilian media outline the specific commissions. Purchases through Apple’s own App Store will still incur a standard commission.

This fee is either 10% or 25% based on a developer’s program status. Using Apple’s own payment system adds a 5% transaction fee. The rules for external payments are more nuanced.

If an app uses only static text to mention an outside website, Apple charges nothing. If a clickable link or button redirects users for payment, Apple takes a 15% fee. Third-party app stores themselves will pay a 5% Core Technology Commission.

Immediate Impact and Global Implications

Apple has a strict deadline to comply. The company must implement all required changes within 105 days. This rapid timeline pressures Apple’s engineering and legal teams.

The Brazilian market represents a critical test case. Other global regulators are watching closely. Similar antitrust pressures exist in the European Union, United States, and Asia.

For Brazilian consumers, choice will increase significantly. Users may soon download apps from stores not operated by Apple. They might also find cheaper digital goods due to payment competition.

Developers stand to benefit from lower fees and more flexibility. They can now communicate directly with customers about cheaper options. This could lead to more investment in the local app economy.

This settlement marks a pivotal shift in digital market regulation. The mandated App Store changes in Brazil challenge Apple’s global business model directly. Other nations may soon follow with similar aggressive reforms.

Thought you’d like to know

What exactly is changing for iPhone users in Brazil?

iPhone users will be able to download apps from alternative, third-party app stores. They will also see more payment options within apps, potentially including lower prices.

How much will Apple charge under the new fee system?

A complex new fee structure applies. Key rates include a 15% commission for purchases via a direct external link and a 5% fee for transactions processed through third-party app stores.

When will these changes take effect?

Apple has up to 105 days to implement the changes from when the settlement becomes binding. This means users could see the new options within a few months.

Will this make apps cheaper for consumers?

It is very likely. With developers saving on commission fees by using alternative payment systems, they may choose to pass some of those savings on to customers through lower prices.

Why did Brazilian regulators take this action?

CADE investigated Apple for alleged anti-competitive practices. They concluded that Apple’s rules on app distribution and in-app payments unfairly limited competition in the digital market.