Apple Explores Allowing iPhone, iPad Users to Download Apps Outside Its Store

The changes would give companies other than Apple access they have long coveted to load apps outside of the rules and payment system of Apple’s cash-cow App Store, something often called sideloading.

At the same time, Apple also is likely to make use of a provision in the new law that would allow it to impose restrictions on sideloaded apps, to protect the security of its devices, the people said. Those restrictions could include requiring security checks and malware scans for sideloaded apps, one of the people said.

An Apple spokeswoman declined to comment.

Bloomberg earlier reported Apple’s plan to allow sideloading in response to the European law.

Apple is trying to have the sideloading feature ready to announce by next summer for its annual developer conference, but it is also possible that the company will decide not to move ahead with the plan, one of the people said.

Apple’s effort comes as tech companies are starting discussions with the European Commission, the EU’s executive arm, about which of the company’s services will be subject to which provisions of the law, called the Digital Markets Act.

The law, passed earlier this year over the objections to some provisions from Apple and many of its rivals, aims to create more competition for the biggest tech companies operating in Europe, as defined in part by revenue, number of users and market capitalization. Those companies are expected to include Apple,

Alphabet Inc.

and

Amazon.com Inc.

and others. Its provisions will be enforced beginning in 2024.

Apple is debating internally whether it should launch the changes only in Europe in response to the EU law, or expand the opening of its system more broadly, the person familiar with the matter said. Other governments, including the U.S. and South Korea, are scrutinizing the dominance of Apple’s and Google’s mobile-app platforms.

Exploring sideloading is a major turnaround for Apple. The company has for years battled lawmakers, regulators and rivals around the world to defend its control of how developers can access the more than one billion users of its devices. It has argued that sideloading, so-called because such downloads circumvent Apple’s app store, could allow malicious actors to access users’ phones. Earlier this year, it said the EU law would “cripple the privacy and security protections that users have come to expect.”

Critics accuse Apple of restraining competition by requiring app developers to use its store and payment systems and then charging them commissions of up to 30% for certain transactions.

Apple has long described its iPhone as being more secure because of how it controls its own software ecosystem, approving each app and serving as the sole gateway to download them.

Tech executives say they are cooperating with European regulators over the new law, hoping dialogue on the details of the new rules will lead the EU to adopt interpretations of certain provisions that the companies find workable. The law says that some of its provisions, including the one about sideloading, could be complemented by company-specific interpretations—something that will be the subject of negotiations with companies over the next year.

In recent years, Apple has leaned more heavily on services as an engine for growth. Apple’s commissions on the App Store are estimated to account for around 30% of its overall services revenue, which was about $68 billion last year. App Store commissions also make up around 10% of the company’s total operating profit, estimated Martin Yang, an analyst at investment firm Oppenheimer & Co.

However, the financial implications for Apple of allowing alternative ways of getting software onto its devices will likely be limited, some analysts said. If Apple adds security requirements for apps downloaded outside its App Store, it could slow adoption, they said. Apple users will likely continue to rely on the App Store,

Amit Daryanani,

an analyst at investment bank advisory firm

Evercore Inc.,

wrote in a note.

A bigger hit for Apple, analysts said, could come from the part of the new law that could force the company to allow other payment systems to compete with Apple’s in-app purchases—of which Apple takes commissions of up to 30%.

The Digital Markets Act has a provision that requires platforms like Apple’s to allow for outside services—including certain payment systems—to have the same access as the platform’s own such services. Apple is looking into how and if it would accept third-party payments systems, but it hasn’t made a decision, said one of the people familiar with the matter.

Apple already accepts some third-party payment systems for dating apps in the Netherlands as part of its compliance with an antitrust decision there. Apple only implemented the system after months of periodic fines for noncompliance.

If Apple allows sideloading, it could open the door for large game publishers to launch gaming-focused app stores, among other possibilities for competitors.

Microsoft Corp.

, for example, has said it has ambitions to launch a mobile gaming store. It wants to break up the “duopoly” of Apple and Alphabet’s Google, Microsoft Gaming Chief

Phil Spencer

said at The Wall Street Journal’s Tech Live conference in October.

The EU is separately investigating Apple on charges of anticompetitive conduct against music apps like Spotify. Apple is accused of squeezing the music services by making them use its in-app purchase system, which takes a commission. Apple has disputed the charges and said Spotify is successful without selling subscriptions via its iOS app.

Write to Aaron Tilley at [email protected] and Sam Schechner at [email protected]