Australia calls out Google & Apple's app store duopoly

The Australian Competition and Consumer Commission (ACCC) raised concerns about Google and Apple's dominance in the app store market in their second recently published Digital Platform Services Inquiry interim report.

The competition watchdog has suggested changes that should be implemented to allay its concerns. It also warned that regulations may be put into place if Apply and Google do not make changes.

The ACCC and its Digital Platform Services Inquiry

The Australian Competition and Consumer Commission is a regulatory body that comes under the Australian Government's Treasury department. The body aims to regulate competition in the Australian market and part of its mandate is to prevent illegal anti-competitive behavior. On the 10th of February 2020, the Australian Government asked the ACCC to conduct an inquiry into markets for the supply of digital platform services. The digital platform services covered by the inquiry are:

  1. Internet search engine services
  2. Social media services
  3. Online private messaging services
  4. Digital content aggregation platform services
  5. Media referral services
  6. Electronic marketplace services.
  7. Digital advertising services by digital platform service providers
  8. Data practices of both digital platform service providers and data brokers

The ACCC submitted its first interim report on the 30th of September 2020. Recently it published its second interim report. In the report, the regulatory body has shared concerns regarding the app store market, particularly about Google and Apple. The ACCC's inquiry is set to conclude its inquiry and submit a final report by 31 March 2025.

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ACCC's Concerns that Google & Apple need to address

The ACCC has identified that Google and Apple's app stores have a duopoly in the app distribution market. It is important for developers to have fair and reasonable terms when dealing with the companies.

The incentive to promote their own apps

Both Apple and Google not only provide marketplaces for app downloads, but they also compete within these marketplaces with their own apps said ACCC chair Road Sims. Both companies have the ability and incentive to promote their own apps over competitors. Google and Apple also control the terms that competitors must comply with in order to be available in their stores. The ACCC says that app developers should have transparency and more information about how their apps are made visible to consumers and consumers should be able to uninstall or change any default apps on their devices.

Payment restrictions

Apple and Google impose restrictions on what payment systems developers can use for in-app purchases. Developers must use Apple and Google's own payment systems. Apple currently charges a 30% commission for in-app purchases made from apps that are downloaded via its app store. In fact, Epic Games is set to meet Apple in a US court over the company's decision to remove popular game Fortnite for violating its terms and allowing users to make in-app purchases directly with Epic Games and bypassing Apple's 30% commission.

Faster dispute resolution

The regulatory body has also identified a need for an external dispute resolution body. Some apps cause harm to consumers through scams and predatory in-app purchase behavior. Consumers should have a faster and better dispute resolution mechanism to resolve any disputes they may have regarding payments or other challenges.

Improvements suggested by the ACC

The ACCC recognized that there are significant benefits for both developers and consumers because of Apple and Google's stores however, the watchdog also says there are significant issues with how the market operates. In the report the ACCC has suggested some improvements that include:

  1. Allowing consumers to rate and review all apps
  2. Allowing consumers to change any pre-installed default app on their device
  3. Making it possible for app developers to provide consumers with information about alternative payment options
  4. Restricting information collected by Apple and Google's app marketplaces from their other operations to prevent unfair competition

The ACCC will take into account any changes that Apple and Google make when creating if final report at the conclusion of their inquiry. The body has not ruled out recommending regulations for the market to address its concerns.

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