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EU Overhaul to Have Minimal Impact on Apple’s Bottom Line

Apple recently announced major changes to iOS, Safari, and the App Store, which will allow iPhone users in the 27 member countries of the European Union (EU) to install apps from third-party app storefronts, select a default third-party contactless payment platform, and use an alternative payment platform for in-app transactions. These changes are set to take effect in March with the release of iOS 17.4.

Some analysts are concerned that these changes, which include reducing the “Apple Tax” for developers using Apple’s in-app payment platform, may slow down the growth rate of Apple’s Services unit. However, Apple will impose a 50-cent fee on all apps downloaded after reaching one million installs in the EU, which may offset the impact of the lower Apple Tax. Additionally, the EU is responsible for only 6% of App Store revenue.

The Services segment is Apple’s second-largest business unit after the iPhone, generating revenue of $85.2 billion in fiscal 2023. Therefore, these changes are significant for investors and may influence the company’s stock price. There is also speculation that lawmakers in the U.S. may seek to implement similar changes to digital markets as the EU’s Digital Markets Act (DMA).

Overall, these changes signal a shift in the digital landscape and may have broader implications for the industry as a whole.

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