Apple Defends App Store Policy Citing User Privacy, Ransomware Attack Protection

Apple Inc AAPL raised qualms about direct app download on iPhones bypassing Apple’s App Store, as lawmakers and regulators targeted the iPhone maker, including the Epic Games Inc lawsuit, Bloomberg reported.

What Happened: Apple argued that the move to bypass the app store would threaten privacy protections, complicate parental controls, and potentially expose data to ransomware attacks, the Wall Street Journal reported.

Apple’s defense comes ahead of the expected debate in the House Judiciary Committee on a package of antitrust bills aimed at reining in the nation’s largest tech companies.

One of the bills could force Apple to open up to third-party app stores and provide all of its iPhone technologies to third-party software makers. Currently, Apple bars access to health data and the phone’s secure storage component for payments for Apple’s apps and services.

The proposals hint towards Congress plans to curb the tech companies’ dominance and their antitrust enforcement attempts.

The European Union’s Digital Markets Act draft could also force Apple to allow third-party app stores.

The push by lawmakers and regulators comes weeks after Apple’s trial with Epic, in which the Fortnite maker asked a court to force Apple to allow third-party download stores.

Why It Matters: Mobile applications are a $142 billion market, and the App Store earns over $20 billion annually for Apple with a profit margin of over 75%. It takes a 30% cut on revenue generated by apps distributed through its digital store. 

The App Store was a significant driver of its $16.9 billion in services revenue generated in the most recent quarter.

Sideloading and downloads from third-party app stores would make it more vulnerable to malware attacks like Alphabet Inc GOOG GOOGL Google’s Android system, Apple said. As a result, the sideloading will harm both users and developers. 

In addition, it will spur new investment into iPhone attacks, driving malicious actors to develop tools and expertise to attack iPhone device security.

Price action: AAPL shares traded higher by 0.19% at $134.24 in the market session on the last check Wednesday.