Apple reportedly plans to allow third-party app stores to distribute software for the iOS devices such as iPhones and iPads. This is despite being concerned about this initiative's potential security and financial risks.

"Sideloading" Approach

As reported by The Wall Street Journal (WSJ), people familiar with the matter said that Apple's software and app-store engineering department is driving efforts to allow other app stores and software developers access to the iPhone.

This is in light of a new European Union (EU) law, the Digital Market Act, aimed at generating greater competition among the most powerful tech companies.

By making these modifications, firms other than Apple could finally "sideload" software. Sideload is a technique that bypasses Apple's cash cow App Store and its strict regulations and payment system.

Meanwhile, Apple is expected to take advantage of a clause in the new legislation that would enable it to limit sideloaded software to safeguard the devices' security, according to the sources. One person stated these limits might include security and malware tests for sideloaded apps.

Bloomberg previously claimed that Apple would comply with the European regulation by permitting sideloading.

New European Law

Apple's decision coincides with the commencement of IT firms' conversations with the European Commission (the EU's executive arm) over which of Apple's services would be subject to which aspects of the legislation, dubbed the Digital Markets Act.

The legislation was approved this year amid objections from Apple and many of its competitors. It seeks to foster greater competition for Europe's top internet businesses, as defined by revenue, number of users, and market capitalization. 

Apple, Alphabet, Amazon, and others are likely to participate. Its provisions start in 2024.

According to one insider, Apple is deciding whether to deploy the modifications just in Europe in response to EU regulations or to open its system more generally. 

WSJ believes that Apple has made a U-turn by even considering sideloading.

Related Story: EU Could End the 'Apple Tax' with the Digital Market Act that Could Force the Company to Give Up Its 'Monopoly'

Impact on the Business

Apple has fought to limit how developers may reach its 1 billion users for years. Sideloading, which disregards Apple's app store, might enable hostile actors to access customers' phones, the company claims. This year, it argued the EU bill will "cripple privacy and security protections."

Apple is accused of limiting competition by forcing app developers to utilize its store and payment methods and charging them fees of up to 30%.

The firm has long portrayed the iPhone as more secure since it controls its own software ecosystem and approves each app.

Tech leaders said they are engaging with European authorities on the new law, hoping debate on the specifics will lead the EU to adopt viable interpretations of crucial parts. 

Some of the sections of the legislation, particularly the one regarding sideloading, may be supplemented by company-specific interpretations, which will be the topic of talks with firms over the following year.

Analysts say Apple's financial impact from permitting third-party apps will be minimal. Adoption might stall if Apple imposes security criteria for applications downloaded outside the App Store. 

Evercore analyst Amit Daryanani predicts Apple consumers will only continue to utilize the App Store.

Also Read: Apple Announces 700 New Price Points and Tools in App Store, Biggest Pricing Upgrade in History