Apple to open iPhone to alternative app stores, lower fees in Europe

Apple has unveiled a sweeping plan to tear down some of the competitive barriers that it has built around its lucrative iPhone franchise.

The announcement on Thursday comes as it moves to comply with upcoming European regulations aimed at giving consumers the choice to use alternative app stores.

The overhaul, scheduled to take effect in early March, will include concessions that Apple had previously refused to make in its app store, including lowering the fees that it collects from developers in Europe.

Most notably, Apple for the first time will allow iPhone users in Europe to switch to use app stores other than the company-operated one that comes installed on the mobile device. It will also enable enable developers to offer alternative payment systems that could help them make more money while potentially lowering their prices.

But Apple says it believes opening up the iPhone to outsiders will also increase the chances that consumers venturing outside its proprietary system will be exposed to hackers and other security problems. It says it is taking what it sees as a risky step only to comply with European rules that take effect March 7.

The revisions will also include decreasing the 15 per cent to 30 per cent commission that Apple plans to continue charging throughout the rest of the world on in-app transactions completed on the iPhone.

In Europe only, Apple is dropping its commission on in-app transaction to 10 per cent to 17 per cent for developers who opt to stay within the company's payment processing system. Apple won't collect any commissions on in-app transactions completed through alternative payment systems.

That is a stark contrast to how Apple is complying with a court ruling that took effect last week that requires it to allow iPhone apps to provide links to different payment options in the US. If an in-app transaction is completed outside the Apple system in the US, the company plans to collect commissions from 12 per cent to 27 per cent to prevent freeloading on its iPhone software. Apple will continue to charge 15 per cent to 30 per cent on in app-transaction done through its payment system in the US.