One of the earliest and most prominent alternative application marketplaces to emerge within the European Union, born from the region’s landmark Digital Markets Act (DMA), is ceasing its operations. Setapp Mobile, an ambitious venture from the Ukrainian-based software developer MacPaw, which launched in September 2024, offered a curated collection of dozens of applications spanning categories such as productivity, finance, video editing, photography, and various creative tools. Its impending closure signals a significant development in the nascent landscape of alternative app distribution on iOS devices in the EU, highlighting the profound challenges developers face in navigating the complex regulatory environment.

Setapp Mobile’s innovative business model provided consumers with comprehensive access to its mobile application library through a straightforward $9.99 monthly subscription. This service was exclusively available to users whose Apple ID was registered to an EU member state, directly aligning with the geographical scope of the DMA’s mandate for increased digital market openness. However, the company has now confirmed that all applications will be progressively removed from Setapp Mobile, with a definitive sunset date set for February 16, 2026. MacPaw has clarified that its well-established Setapp Desktop service, catering to macOS applications, will remain unaffected by this decision.

The announcement of the shutdown, initially posted on Setapp’s official support website, quickly gained traction within the tech community, first being reported by MacRumors. The underlying rationale provided by MacPaw centers on "still-evolving and complex business terms that don’t fit Setapp’s current business model." This statement points directly to the intricate and, for many, burdensome fee structures imposed by Apple for applications operating under its revised EU business conditions.

The Digital Markets Act and Its Intent

To fully grasp the implications of Setapp Mobile’s withdrawal, it’s essential to understand the context of the Digital Markets Act. Enacted by the European Union, the DMA is a groundbreaking piece of legislation designed to foster greater competition and fairness in digital markets by regulating large online platforms, dubbed "gatekeepers." These gatekeepers, including tech giants like Apple, Google, Meta, and Amazon, are identified based on their significant market power and ability to control access to digital services.

The DMA’s core objective is to prevent gatekeepers from imposing unfair conditions on businesses and end-users, thereby promoting innovation, consumer choice, and contestability. Among its most impactful provisions is the requirement for gatekeepers to allow third-party app stores and sideloading on their platforms, effectively dismantling the long-standing "walled garden" approach, particularly on iOS devices. For years, Apple maintained an exclusive ecosystem where all iOS apps had to be distributed through its App Store, subject to its strict rules and a commission of up to 30% on transactions. The DMA aimed to break this monopoly, theoretically opening the door for new business models and greater developer freedom.

Apple’s Compliance and the Core Technology Fee

In response to the DMA, Apple introduced a revised set of business terms for app developers in the EU in early 2024. While seemingly complying with the letter of the law by allowing alternative app marketplaces, these new terms came with a controversial caveat: the Core Technology Fee (CTF). This fee stipulates that developers distributing apps outside the official App Store must pay €0.50 for each first annual install of their app over one million within a 12-month period.

This fee structure immediately drew criticism from developers and industry observers alike. Critics argued that the CTF, rather than simplifying the ecosystem, introduced a new layer of complexity and financial risk, especially for popular apps or those operating on a freemium model. For an alternative app store like Setapp Mobile, which aims to aggregate numerous apps, the cumulative CTF could quickly become prohibitive, particularly if many of its bundled applications individually surpassed the one-million install threshold. Even for smaller developers hoping to leverage alternative distribution, the specter of a sudden, large CTF bill for unexpected virality presented an existential threat.

Apple’s rationale for the CTF was to cover the costs associated with its intellectual property, developer tools, and the underlying technology that powers iOS, regardless of the distribution channel. However, many perceived it as a deterrent designed to make alternative app stores less attractive than the established App Store, effectively maintaining Apple’s dominant position while technically adhering to the DMA. The tech giant had previously revised its fee structure in response to pressure and potential non-compliance penalties, yet these revisions often led to more intricate and less transparent financial models rather than simpler, more developer-friendly terms.

Setapp Mobile’s Viability Challenge

MacPaw’s statement explicitly references these "still-evolving commercial conditions" and concludes that its business model for Setapp Mobile was "not viable." This assessment underscores a critical point: the financial architecture introduced by Apple makes it exceedingly difficult for alternative app stores to operate profitably, especially those offering subscription-based access to a portfolio of apps. Setapp Mobile’s model, predicated on a single monthly fee for a library of applications, would likely expose it to significant CTF liabilities if the individual apps within its bundle gained substantial traction.

For a company like MacPaw, planning for growth and monetization becomes a formidable challenge when the underlying cost structure is unpredictable and potentially punitive. The uncertainty surrounding future regulatory interpretations and possible further adjustments to Apple’s terms adds another layer of risk, making long-term investment and strategic development perilous. This lack of a stable, predictable commercial framework can stifle innovation and deter new entrants, directly contradicting the DMA’s goals.

Market and Developer Impact

The shutdown of Setapp Mobile sends a clear signal to the broader developer community and regulatory bodies. It suggests that despite the DMA’s intentions, the path to truly open and competitive app markets on iOS in the EU remains fraught with obstacles. For developers, the promise of new distribution channels and alternative monetization strategies now seems more distant and riskier. Many smaller developers, who might have seen alternative stores as a lifeline away from Apple’s App Store fees and policies, may now reconsider their options or scale back their ambitions for the EU market.

From a consumer perspective, Setapp Mobile’s closure means a reduction in choice. While the platform was relatively new, it represented a different approach to app discovery and access, offering a curated subscription model distinct from individual app purchases or free-to-play models often prevalent in the App Store. Its disappearance narrows the nascent landscape of alternative options, potentially limiting the diversity of services available to EU users.

A Historical Perspective on Digital Gatekeepers

The saga of the DMA and the challenges faced by alternative app stores like Setapp Mobile are rooted in a long history of digital platform dominance. For over a decade, Apple and Google have effectively controlled the two major mobile operating systems, iOS and Android, and by extension, the primary distribution channels for mobile applications. This duopoly has led to accusations of anti-competitive practices globally, prompting investigations and legislative efforts in numerous jurisdictions beyond the EU, including the United States, South Korea, and Japan.

The "walled garden" approach, while offering certain benefits in terms of security and user experience, has been criticized for stifling competition, extracting high rents from developers, and limiting consumer choice. The DMA represents one of the most assertive regulatory attempts to dismantle aspects of this control, reflecting a global shift towards greater scrutiny of tech giants. However, as Setapp Mobile’s case illustrates, even with strong legislation, the implementation and the gatekeepers’ responses can introduce new forms of complexity that undermine the spirit, if not the letter, of the law.

The Path Forward: Remaining Players and Future Outlook

Despite Setapp Mobile’s exit, the alternative app store landscape in the EU is not entirely deserted. Other players continue to operate, most notably the Epic Games Store, launched by the creator of Fortnite, and the open-source AltStore. Epic Games, a vocal critic of Apple’s App Store policies, has a long-standing legal battle with the tech giant over app distribution and payment systems, making its continued presence in the alternative market particularly significant. The AltStore, known for its focus on indie developers and unique applications, represents a more community-driven approach.

However, the closure of Setapp Mobile serves as a stark reminder of the financial and logistical hurdles that even well-funded and innovative companies face when challenging established ecosystems. Industry analysts suggest that the long-term success of the DMA in fostering genuine competition will depend on several factors:

1. Regulatory Enforcement: The European Commission’s willingness and ability to scrutinize and potentially penalize gatekeepers for practices that undermine the DMA’s intent.
2. Developer Adaptation: The ability of developers and alternative store operators to innovate business models that can navigate the current complex fee structures.
3. Market Demand: The extent to which consumers actively seek out and adopt alternative app stores, driving demand and justifying investment from developers.

The departure of Setapp Mobile is more than just the shutdown of one app store; it is a critical early indicator of the profound challenges and potential unintended consequences arising from the EU’s ambitious digital market regulation. It underscores the ongoing tension between regulatory aspirations for open digital markets and the deep-seated business models of established tech giants. As the digital landscape continues to evolve, the viability of true competition in the app ecosystem will remain a closely watched battleground for developers, consumers, and regulators alike.