A million dollar letter of credit, Apple’s mandatory requirement if you want to have your own app store

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A million dollar letter of credit, Apple’s mandatory requirement if you want to have your own app store

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We’re about to witness the biggest change in App Store history. Ultimately it won’t be with a Side loading in this capacity, but with the opening in Europe of a new “store of stores”. That is, the usual App Store with the incorporation of a section in which Developers will be able to add their own app stores.

However, one of the reasons why the security of iPhones should not be threatened is that Not everyone will be able to download their own app stores. Technically yes, since Apple is not closed to any company or independent developer, but its requirements are very demanding so that everyone can really aspire to it.

A millionaire’s “deposit” that will prevent anyone from downloading their application

If you are not very aware of what is going to happen, and in accordance with what we mentioned in the introduction, it is that the new European regulations require that applications outside the App Store can be downloaded from devices like the iPhone. The solution already confirmed by Apple is a happy medium that, at least for now, is already agreed upon by the European Union.

The idea is that on the old continent we have an App Store with identical operation as always, being the repository of thousands of applications as we already had in recent years. The change is that now in this same App Store we can download other application stores and install them on the iPhone to download other applications which in this case do not pass through the same filters as the App Store. Even if it’s not quite like that.

And even though these stores are independent, they will be monitored by Apple and They will not allow hosting of applications that may cause problems of any kind.; whether it works on the iPhone or compromises the security and/or privacy of user data.

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And how does Apple ensure developers comply? Well, apply for what’s called a standby letter of credit. This is what they specify in their terms and conditions for anyone who wants to download their app stores from the European App Store:

[El desarrollador] must provide Apple with a standby letter of credit from a company with an A financial rating (or equivalent from S&P, Fitch or Moody’s) in the amount of $1,000,000 […] and keep this letter of credit on hold for as long as your alternative EU app store is operational.

This letter of credit becomes a kind of guarantee. It is a financial document which certifies that the company delivering it undertakes to fulfill its contract with the other party, in this case Apple.

No matter what, Apple wins with this requirement. It remains to be seen whether Europe will eventually bring it down…

Yet, Apple makes a double profit with this requirement. Since one million dollars is a large amount, this deters many potential suspects from wanting to abuse this advantage and add malware to applications. On the other hand, it ensures that if someone trespasses and breaks the rules, they will be able to benefit economically.

However, like everything, it also has its counterpart in the sense that poses a significant barrier to entry for small developers, forcing them to enter into agreements with other companies if they want to be in an alternative store. And if not, they will still have the classic App Store according to Apple dogmas, in which there are no economic requirements of this type.

Cover image | Edited version of Freepik

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