Epic's Overhaul of App Market: A New Era in Health Tech Integration

A Major Shift in Epic's Approach

In December 2022, Epic, the electronic health record (EHR) giant, revealed its plans to overhaul its app market. This marked a significant shift in the company's approach to app integration and accessibility. Recently, Epic has launched a new 'Showroom' website for third-party apps and services. This platform is expected to revolutionize the way users explore and access a multitude of third-party apps and services within the Epic ecosystem.

Enhanced Interaction with Third-Party Vendors

Epic is reinventing how its provider customers engage with third-party vendors by rolling out three programs within its app market. These changes could potentially impact the third-party vendor market, given Epic’s growing dominance in the hospital EHR space. The overhaul includes three categories: Connection Hub, Toolbox, and Workshop, with each offering different levels of integration with Epic’s EHR system. This has led to forming relationships with clinical documentation companies like Abridge and Microsoft subsidiary Nuance, consumer experience company Press Ganey, and customer relationship management software company Talkdesk.

Launching the Showroom Website

Epic has replaced its app market with the Showroom website, intending to connect health tech companies with health systems and providers. The new website features various programs and services, including the Supply Shop, Emeritus program, and Health Grid. Epic has also modernized its App Orchard into the Connection Hub, an online directory for vendors to display their interoperability with Epic software. Vendors are required to pay an annual fee to join the Connection Hub, which has sections highlighting software categories, recommended practices for integration, and co-developed technology with third-party vendors.

Implication of App Store Overhaul

The U.S. Supreme Court dismissed the appeal filed by Apple against the ruling of a lower court, upholding the App Store overhaul in the Epic Games vs. Apple case. This ruling is a significant setback for Apple, which estimated a revenue of $1.1 trillion through its App Store in 2022. The ruling necessitates Apple to adjust its App Store payment policies, allowing developers to include buttons and links for alternate payment methods. This could have a considerable impact on Apple's revenue. The ruling also holds significant implications for the app development community, potentially saving developers from substantial losses due to commission fees charged by Apple.

Apple’s Response and the Backlash

In response to the ruling, Apple opened up its iPhone walled garden to U.S. app makers to use outside payment systems but decided to charge a 27% commission, prompting outrage among developers. Critics such as Epic Games CEO and Spotify labeled Apple's move as 'outrageous' and 'anticompetitive.' The App Store generated $1.1 trillion in developer billings and sales in 2022. The company has faced legal battles over its app store payment processing fees, including a ruling in favor of Epic against Google. Apple is also dealing with antitrust scrutiny in the U.S. and Europe.

27 Percent App Store Tax and Its Consequences

Apple decided to implement a new 27 percent tax on alternative payment methods in the App Store, leading to backlash from critics such as Spotify and Epic Games. While the change was made to comply with a court order, critics argue that it is anticompetitive and undermines the court's efforts to enable greater competition and user choice. Similar policies in the Netherlands and South Korea have also faced fines and warnings from regulators.