Australian watchdog considers regulating Apple and Google to boost app store competition
As Fortnite creator Epic Games continues its global legal battle against Apple and Google over in-app payments, the Australian Competition and Consumer Commission says “upfront rules and regulations” may be needed to force the tech giants to open their app stores to greater competition.
For Apple iOS platforms, developers must use the App Store, while for Google, apps can be installed on Android devices outside the Play store either through direct download or alternative marketplaces, but uptake of these options is limited.
In April, the ACCC released an interim report as part of its long-running digital platforms inquiry, arguing that while Apple and Google competed with each other, both companies faced very little competition in app distributions on their respective mobile platforms. The competition watchdog suggested the companies were stifling competition with their control over what apps could do on their platforms.
The interim report argued users should be able to choose alternative payment options outside those provided by Apple and Google. They at present take a 15-30% cut from every purchase. The report also suggested users should be able to decide between default apps and third-party apps that performed the same function and that Apple and Google should ringfence data they collected in the app markets from the rest of their businesses so it was not misused.
In a speech to the Global Competition Review webinar on Thursday, the ACCC chair, Rod Sims, will say the commission is yet to make final recommendations, but he flags more rules depending on what other countries do, and whether Apple and Google take steps he believes are reasonable.
“It is likely, however, that upfront rules and regulation may be needed to achieve these objectives,” Sims said in an advance copy of his speech. “We are closely following overseas moves that aim to address the same competition and consumer concerns that we have identified.”
The in-app payment fee has been the focus of lawsuits brought against both companies by Epic Games after Fortnite was kicked off both app stores for bypassing the in-app purchase systems Apple and Google force developers to use.
Epic Games won a full federal court appeal last month to allow the case to be heard in Australia while similar litigation is being considered by a US court. The judgment in the US case has yet to be handed down and Apple has said it will appeal against the Australian decision to the high court.
Sims noted that the European Commission was examining Apple Pay and Apple’s mobile ecosystem and there was litigation by US attorneys general against Google over its app store. Sims suggested such international legal action, along with the Epic Games lawsuit, could help make app stores more competitive before the ACCC headed down the path of regulation.
But he said regulators across the globe needed to have “international coherence and alignment” to be effective.
“The key point … is that while these enforcement actions and market studies are necessary to tackle the problems arising from dominant digital platforms, they are not enough on their own,” Sims said.
“Our own work at the ACCC must be tailored to match our own issues and concerns. But although the finer details of our approaches may vary, competition authorities can still achieve successful global outcomes by aligning their approaches to both enforcement and regulation.
“This will include alignment around upfront regulation and rules as well as enforcement. The competitiveness, and the level and type of innovation in our economy, requires this.”
Google and Apple have fought against any changes to the operation of their app stores. Apple previously stated the App Store requires all apps to meet the company’s “rigorous standards of privacy, security and content, offering our customers a safe and trusted place to download apps”.
Google said in a statement it too provides a safe and secure platform through its app store but added that due to the open source nature of Android, developers were free to use alternatives to Play.