FOCUS: Apple likely to weather EU, Russia’s efforts to promote other apps

By Yekaterina Yezhova

MOSCOW, Dec 26 (PRIME) -- Russia is set to follow in the E.U.’s footsteps to rein in Apple’s control over applications and payment means on its devices, but analysts think the company, whose smartphones still make most cash, would be hardly hurt.

“The E.U. has adopted the Digital Markets Act (DMA), a law that regulates the market of digital services. Under the law, Apple will be obliged to permit installation of third-party applications or marketplaces and open access to some system options. The Digital Development Ministry is preparing a similar bill that will make Apple allow such alternative installations in Russia,” the ministry said in a statement.

The authority plans to submit the bill in January–March 2023.

“If the new law is adopted, installations of applications on the iOS devices that App Store does not have and paying for purchases sidestepping payments via the official applications store will be possible,” the ministry said.

“Developers of marketplaces will also get access to the internal system options on equal terms with the company’s own applications. It means, among others, the change of settings by default, collection of statistics, and permissions in applications.”

In Europe, the DMA will take effect in May 2023, yet certain propositions will stay voluntary till 2024.

News and research agency Content Review head Sergei Polovnikov doubts the initiative would have any impact on Apple in Russia.

“Apple does not work in Russia, it has closed its last office in December. This is why the Digital Development Ministry may draft any bills, Apple would be able to pay no attention at all. All that the firm could have lost in the country, it had already did, at least officially,” Polovnikov told PRIME.

The initiative will unlikely to affect anyone else. “Third-party applications stores can be installed on Android devices, which the ministry and Internet company VK are already doing,” the expert added.

VK together with the ministry launched a beta version of national store of mobile applications RuStore for Android devices in May, and the government put it in November on the list of the programs obligatory for preinstallation on the gadgets sold in the country in 2023.

Apple decided to stop selling its products on March 1, shortly after Russia started its special operation in Ukraine. Media reported in March that Apple might lose at least U.S. $3 million in iPhone sales revenue daily or $1.14 billion annually because of the move.

Mobile operator MTS, which runs a wide retail chain, said earlier that Apple accounted for a third of the country’s 477 billion ruble smartphone market in January–November. Electronics retailer M.Video-Eldorado also told PRIME earlier that Apple led the sales in money terms.

Bloomberg reported earlier in December that Apple is preparing to allow alternative applications stores on its iPhones and iPads, part of a sweeping overhaul aimed at complying with strict E.U. requirements in force since 2024.

Freedom Finance Global analyst Yegor Tolmachyov said quoting researcher SensorTower’s data that customers’ expenses on purchases in App Store amounted to about $21.2 billion. Over the recent years, the regulators and lawsuits forced the company to cut its commission, which now varies from 15 to 30%, by granting benefits to some groups of developers.

“Even under the worst case scenario, when Apple loses all Europe’s revenue of App Store, the company’s maximum loss would not exceed $3.5 billion a year, or 4% of service revenue or 0.9% of total incomes,” Tolmachyov said in a note.

The expert added that the regulatory change would have a minor impact on the company’s business because of little financial pressure and loyalty of Apple’s clients, among others.

(68.6760 rubles – U.S. $1)

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