National Post (National Edition)
App stores have become the new regulators
Digital technologies, such as mobile apps, can scale quickly because they aren't subject to the regulatory hurdles that some other products, such as pharmaceuticals, face. They come to us fast because there is minimal friction associated with the approval process for new apps. Yet that process is increasingly being controlled not by policy-makers, but by the companies that develop the top two mobile operating systems: Apple and Google.
Both the Apple App Store and the Google Play store use a monetization model that was popularized by companies like Nintendo and Sony to sell games for their consoles. This puts the app stores in a position where they decide what is available for us to download. For instance, Apple recently issued new rules that will impact streaming game services run by Google and Microsoft.
Recently, the relationship between developers and app stores has been fraying, with a range of firms calling the policies of the App Store, in particular, into question and bringing them to the attention of lawmakers.
In June, the software company Basecamp, which develops an email app called Hey, disputed the App Store's rules related to in-app subscriptions, of which Apple takes a 30 per cent cut. In August, Epic Games, creator of Fortnite, sought to circumvent the default iOS payment platform and was kicked out of the App Store. Apple is now seeking damages.
And just this month, Spotify urged European Union competition authorities to probe Apple's bundled subscription services. Spotify has previously accused Apple of having too much power and using monopolistic business practices.
Added to their frustration is the fact that not all companies are treated equally: Amazon has a special deal with Apple where Apple receives 15 per cent of the revenue from Amazon's Prime Video app subscriptions — half of the 30 per cent that it charges pretty much everyone else.
Regulators in the United States, Europe, Japan, Australia and Russia are now starting to question the App Store's dominance, while Canada has been quieter, though the Competition Bureau is currently seeking input from market participants to inform an ongoing investigation into Amazon.
While the anti-competition goal is laudable and should be pursued, it does not address the very real governance role these private entities have assumed. These stores determine what mobile applications are available for download, which are given prominence and skim 30 per cent of their revenue.
But they are also much more effective at setting and enforcing standards related to privacy than regulators. Newer privacy-focused legislation in Europe and California have been struggling with enforcement issues. What if their provisions were enshrined in these app stores? That would help lower the costs of enforcement, offer more consistency and better protection for users.
This is not without precedent, as app stores have previously barred apps that promote illicit drugs and smoking, as well as those that make false claims about being free, in response to concerns from policy-makers. It wouldn't be hard to expand these policies to address privacy concerns, as well.
It would seem as if the stores are moving towards even tighter restrictions. For instance, a planned change to Apple's iOS operating system would impact how it and other mobile advertisers track users. Apple is delaying the rollout until 2021 to “give developers time to make necessary changes.” This change skews to the public interest over a private one.
Apple has also demonstrated that it is willing to set different policies in its
App Store in different countries. In August, for example, the company removed thousands of games from its Chinese App Store.
App stores form an economy unto themselves. The global mobile application market was valued at US$106.27 billion ($140 billion) in 2018. In 2019, consumers around the world spent US$120 billion in the App Store and that number is expected to reach over US$400 billion by 2026.
The short timeline between developers submitting their apps and their subsequent availability for download has no doubt contributed to the technology's lawlessness — outside of Apple's requirements, anything goes, especially if it's popular. That's how we get pervasive, and often invasive, apps like Pokémon Go, and the seemingly limitless number of weather apps.
We rely on government to create and uphold rules for firms to follow. Mobile app stores make their own rules, which must be followed by developers who want their apps to be available for download. Yet Apple and Google have largely used their positions as pseudo-regulators to protect their own interests. It's about time they protect ours, as well.
In allowing these firms to co-opt the regulatory role of the state, we have simultaneously diminished the role of traditional public policy in setting and maintaining standards for mobile apps. With updates to Canada's privacy legislation on the horizon, Apple and Google should be required to ensure the apps in their stores meet Canada's privacy rules.
In other words, the legislative changes should be uploaded to the App Store and Google Play.
Vass Bednar is a public policy entrepreneur working at the intersection of technology
and policy.