The App Store will undergo changes because of the EU

Apple is preparing for a significant change: allowing alternative app stores on iPhone and iPad apart from the App Store in the European Union. This move is a response to the EU Digital Markets Act and is expected to be part of iOS 17, according to Bloomberg reports.

Morgan Stanley Analysis: Risk to the App Store

Morgan Stanley analysts suggest that the introduction of third-party app stores and the installation of applications outside the official store would represent a “risk” to Apple’s revenue. iPhone users’ preference for the security and convenience of the App Store is a key factor in this evaluation.

With Apple’s policy change to allow alternative app stores, user loyalty to the App Store is being tested, while the impact on the company’s revenue is evaluated.

Consumer preference and potential financial impact

A survey reveals that less than 30% of iPhone owners are willing to purchase apps outside of the App Store. In an extreme scenario, the total loss of App Store revenue in Europe could mean only 4% less in Apple’s services revenue, and 1% less in total revenue.

Possible commissions in third-party app stores

Apple will likely still receive commissions for purchases made through third-party app stores. In the Netherlands, for example, Apple’s commission is reduced by only 3% for dating apps that use external payment systems.

The possibility of Apple receiving commissions for purchases in third-party app stores could mitigate the loss of revenue from the App Store, maintaining its dominant position in the market.

Long-term perspective to keep the App Store as No. 1

Despite the uncertainties, Morgan Stanley believes that the proposed changes do not pose a material risk to the App Store’s long-term revenue or growth and, therefore, Apple’s stock performance.

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