Apple is laying the groundwork to comply with tough new EU rules that will allow iPhone users to choose apps from outside its App Store, as developers seek to avoid the up to 30 percent fee charged by the US tech giant.

This step comes in response to the decision of the European Union Digital Markets Lawwhich was passed into law last month and is part of the biggest overhaul of the laws that have governed the world’s largest tech companies in more than two decades.

The DMA, which will not be implemented until March 2024, represents the biggest threat to Apple’s control of the closed operating system in the past 15 years.

European Union officials believe an Apple will be disproportionately affected by the new rules. “They’re in a situation where it won’t be easy for them to escape,” said someone directly involved in drafting the rules, adding that it would likely result in billions of dollars in lost revenue each year.

Apple has been fighting to keep all app downloads and payments within the App Store for years, arguing that its “regulation” process was critical to user safety. I experienced Constant criticism and legal challenges from application developers, incl Fortnite Epic Games maker and Spotify music service.

The US tech giant has set up teams dedicated to complying with the new Brussels legislation, but is working out the details as it spells out what the sweeping laws entail, according to people familiar with the matter. The move was first reported by Bloomberg. Apple declined to comment.

“This is big and it’s very essential for innovation,” said Nicolas Reul, president of IAB Europe, an advertising association that believes Apple is abusing its power.

Europe, with 450 million smartphone users, is Apple’s second largest market after the Americas, with a value of $95 billion. The European Union has warned that “repeated breaches” of its DMA legislation could result in penalties of up to 20 percent of global revenue. In the case of Apple, that would be $80 billion.

CFRA Research’s Nicholas Rodelli said Apple’s global operating profit could see an “enormous” 15 percent hit if DMA becomes the de facto global standard, noting that the EU was serious about enforcing rules designed to generate more competition.

It is expected that Apple will look for ways in which it can restrict changes.

EU rules state that “gatekeepers” — large online platforms — “must allow and technically enable the installation and effective use of third-party software applications or software application stores.”

Or it could give Apple leeway to offer so-called sideloading — where users install software through a browser — but not competing app stores.

Another part of the DMA that would affect Apple’s business is the requirement that developers be allowed to install third-party payment systems, rather than being forced to use Apple’s systems.

One of the biggest questions is whether Apple will charge its usual 15 to 30 percent fee for apps installed outside the App Store.

Rodelli said Apple is likely to take a “simple approach,” sticking only where it needs to be, but using security holes to keep the iPhone as locked down as possible.

Apple has previously made it clear that it will fight for what it considers to be legitimate intellectual property payments.

Apple CEO Tim Cook said in his beta on Epic Games last year that the 15 to 30 percent “in-app purchase” (IAP) fee wasn’t just a payment processing fee, but a bigger commission for the tools it makes. Apple and customer service.

“If it weren’t for IAP, we would have to come up with another system for billing developers, which is . . . Cook said.

Apple’s foray with the Dutch Competition Authority over the past year provides insight into how the company’s regulatory playbook applies to DMA.

Last December, Dutch regulators told Apple that banning dating apps from using alternative payment systems was “unreasonable”. It gave the tech giant two months to allow consumers to pay outside of the App Store.

Apple complied after initially paying a €50 million fine for missing a deadline from the Dutch Consumer and Market Authority. However, it exchanged its 30 percent commission for a 27 percent fee, leaving only up to 3 percentage points of additional revenue for the developer, of which payment processing fees would also have to be paid.

Apple also required pop-up messages warning the user that they will “no longer do business with Apple”. Early drafts included a warning that “only App Store purchases are secured by Apple”, which critics saw as an attempt to discourage users from leaving Apple’s platform and was only changed after pressure from Dutch authorities.

Many in the industry expect Apple — which has a history of intense litigation — to try to challenge some aspects of DMA through the courts.

EU regulators point to it as the company with some of the most aggressive lawyers seeking to block or relax the rules. A senior EU official said this led to confrontations between the European Commission and Apple over how to implement the new rules.

“I expect litigation and disputes about implementation details. Apple may not challenge the legislation itself, but it can challenge, for example, what it means to have reasonable security measures,” Rodelli said.

Apple requires additional safeguards on the iPhone because a compromised device could grant access to a user’s location throughout the day as well as highly personal health or financial information.

Even if Apple allows third-party app stores, Eric Woodring, an analyst at Morgan Stanley, expects that no one will use them.

He called any potential fix “more bark than bite,” adding that Apple customers enjoy “the security, centralization, and convenience of the App Store” and value a worst-case scenario revenue of just 1 percent.

Another option could see Apple comply fully with Brussels rules but choose to charge for apps that don’t currently pay anything, such as banking apps or transportation services.

Others point out that Apple could choose to reduce all of its fees to 10 or 15 percent if the EU’s enforcement is too draconian.

Such a move could thwart any emerging competition from alternative app stores and even bring in new sources of revenue from the likes of Spotify and Netflix, big apps where consumers can subscribe and pay on the web.

Both streaming groups have ditched Apple’s in-app purchases because they consider the fee prohibitive, but Ben Bajarin at research group Creative Strategies said 10-15 percent could be more likely if it drives traffic.

“This is the money Apple never had,” Bajarin said. “You could say they could make more money than they get on those cuts.”