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Think tank hits out at proposed app store regulations supported by Spotify and Epic

By | Published on Tuesday 25 January 2022

Music Applications in iOS

An organisation called the Information Technology & Innovation Foundation has written to the US senators behind the proposed Open App Markets Act, insisting that those proposals will achieve the opposite to the Congress members’ stated aims.

The Open App Markets Act seeks to regulate app stores – in particular the Apple and Google app stores – and deals with various gripes expressed by app makers including Spotify and Fortnite maker Epic Games.

In particular, it would force Apple and Google to allow app-makers to use and sign-post alternative payment platforms within their apps, making it easier to circumvent Apple and Google’s own commission charging transaction systems.

Spotify, Epic and many other app makers have accused Google and especially Apple of forcing anti-competitive rules on companies that make apps for use on Android and iOS devices.

One of the Senators behind the Open App Markets Act, Richard Blumenthal, said last year that the proposed new laws would “tear down coercive anti-competitive walls in the app economy, giving consumers more choices and smaller start-up tech companies a fighting chance”.

He added: “For years Apple and Google have squashed competitors and kept consumers in the dark – pocketing hefty windfalls while acting as supposedly benevolent gatekeepers of this multi-billion dollar market. I’m proud to partner with senators [Marsha] Blackburn and [Amy] Klobuchar in this breakthrough blow against big tech bullying. This bipartisan bill will help break these tech giants’ ironclad grip, open the app economy to new competitors, and give mobile users more control over their own devices”.

But the Act will actually “damage the app economy, decrease choice, decrease quality and increase costs for consumers”, reckons the Information Technology & Innovation Foundation, a think tank led by academics and tech giants which says its mission is to “formulate, evaluate, and promote policy solutions that accelerate innovation and boost productivity to spur growth, opportunity, and progress”.

In an open letter to the senators, the ITIF disputes the premise that the app market is uncompetitive, noting that while Google and Apple may basically have a duopoly when it comes to apps in the US, a duopoly is not a monopoly.

Plus, on a global basis, there are other app stores in the market place, many of them run by Chinese tech giants like Tencent and Alibaba. Of course, that kind of ignores the fact that, for an iPhone owner, Apple does enjoy an app monopoly, but the argument goes that any iPhone-owning app buyer pissed off by that should just buy a different phone.

“By targeting Apple’s App Store and Google’s Play Store”, the ITIF writes, “the Open App Markets Act will damage a vibrant app economy that currently benefits app developers and consumers and stands as one of America’s flagship digital innovations – only to offer unregulated Chinese app stores a comparative advantage over US-based app stores. Senators should not try to fix an app economy that is not broken”.

Elsewhere the letter argues that there’s plenty of choice in the marketplace, first because there are millions of apps to choose from, and – when it comes to app stores – Google and Apple have slightly different policies regarding to extent to which they control the app experience on their respective devices.

Therefore customers have a choice when it comes to choosing between an Android or iOS phone. And under the Open App Markets Act, Apple would have to adopt policies more like Google, thus reducing competition. Yeah, whatever.

“By ensuring users can only install approved apps from its app store, Apple prioritises user privacy and security”, the letter reckons. “In contrast, by allowing users to install any apps on their devices, even ones not approved for the Google Play Store, Google prioritises user customisation. Unfortunately, the bill will provide lower choices for app developers and consumers as the forced openness will align Apple’s approach to Google’s”.

So far so pretty unconvincing. Perhaps with that in mind, the letter also hones in on Apple’s main argument in favour of its strict App Store rules, ie that it’s standing up for user privacy and security.

“Perhaps the most concerning aspect of the bill”, the letter adds, “is that it will lead to lower-quality apps: As the bill imposes a wide range of preemptive obligations precluding app stores from policing scams malware, and other poor-quality apps, consumers will download apps that are, at best, not providing satisfactory quality of service, and at worst giving them viruses, among other harms”.

The letter concludes: “The Open App Markets Act attempts to reach a state of perfect competition in the app economy against the inevitable network effects that characterise, and generate value to, app stores. This attempt would fall short of achieving the bill’s stated objectives and instead would decrease the overall efficiency of the app economy, leaving everybody worse off – consumers, app developers, digital ecosystems, and US leadership in digital innovation. A much more reasonable approach is warranted”.