Australia’s competition regulator on Tuesday announced that it will investigate mobile app stores as part of its ongoing inquiries into digital platforms. It will examine issues including the use and sharing of data by apps and the extent of competition between Google and Apple’s app stores. It will also see whether pricing in Australia’s mobile apps markets needs to be more transparent. The Australian Competition and Consumer Commission (ACCC) is thus seeking comments on a newly released issues paper until October 2. Based on the responses, the ACCC will release a report on app marketplaces in March 2021.

The issues paper noted that its focus was primarily on Apple and Google’s app stores, but it welcomed views on all app marketplaces.

In a statement, ACCC deputy chair Delia Rickard noted that apps had been become essential for businesses for both people and businesses, a trend that is likely to have increased during the ongoing Covid-19 pandemic. She said that a spot on major app stores was crucial for the businesses of app developers and suppliers, and fail to do so was a major setback. “We are keen to provide greater transparency on how this process works,” she said.

Marketplace conduct and ‘ecosystem’ traps: Issues raised by ACCC

Do app store/OS ecosystems trap consumers? The ACCC noted that both Google and Apple, along with their app stores, offer a range of services such as e-mail, software such as operating systems, tools to build apps and services that help app providers monetise their apps. Referring to these related goods and services as “platform ecosystem”, the regulator asked if they affected the conduct of the market places or the conduct of app providers who wish to have apps in their marketplaces.

  • It asked whether the app marketplaces “bundled” services to encourage them to stay in their platform’s ecosystem. What strategies, it asked, are used by app marketplaces to entrench consumers in their platform ecosystems? Bundling is a practice that has attracted antitrust action against tech giants across the world. For instance, a few weeks ago, it was reported that Google was being investigated by US authorities for bundling its advertising services to stifle competition in the ad tech market.

Do first-party apps put third-party providers at disadvantage? The regulator has sought views on whether app stores give preference to their own apps, hence making the respective market place uncompetitive for third-party app providers. It noted previous complaints against Apple in some jurisdictions where the company was accused of acting as a “gatekeeper” to affect competition between its own apps and those distributed by providers outside. This emerged as a thorny issue when Apple CEO Tim Cook was summoned by American representatives at a hearing on antitrust.

Are Google and Apple misusing data collected from app stores? The ACCC noted that the app stores were collecting user and usage data as part of their services to app developers. It noted concerns that the companies may be using this data to gain an edge over other market participants. For instance, they may be using it to identify which product development ideas were successful and emulate them in their own apps. Or they could use to identify and respond to emerging competitors through their own apps. The regulator sought to know what data is collected exactly, what it is used for, and whether this data is available to other market participants.

  • Additionally, the ACCC also asked whether the consumers were aware of the what data was being collected from them with both the marketplace and providers. It also sought clarity on which party was supposed to provide these disclosures to the consumers.

‘Do app stores restrict users’ access?’

  • Barriers of entry and expansion in app marketplaces: Google and Apple, the report noted, were the two dominant mobile operating systems, with 99% of all devices using Android or iOS. It said while Apple’s App Store was the only marketplace on iOS, Google Play was only the primary one on Android; licensees of Android could develop their own marketplaces as Amazon and Samsung have done. The report has sought views on whether there are any barriers for new entrants into the business.
  • Are marketplaces the only way to distribute an app? The ACCC has asked app providers (publishers) how difficult it is for them to distribute an app without using Google or Apple’s stores. It also asked why and how providers distribute apps on both stores, or choose one over the other. It took the example of Epic Games, which bypasses the Play Store and allows users to download its game Fortnite from its website. The ACCC also asked consumers how easy it was for them to source apps without using the two app stores, and to what extent web-versions of mobile apps (if they exist) substitute the mobile versions. Additionally, it asked what risks were associated with “sideloading” of apps when compared to downloading them from the app stores.
  • Are both app stores substitutable? ACCC has asked consumers if they are able to (or wish to) swap between the Google and Apple’s marketplaces. “What are the barriers associated with using or changing app marketplaces?” it asked.

‘Is the the on-boarding process discriminatory?’

On screening process, display and rating system: The ACCC asked if the processes of screening applications and granting them access on a marketplace was being done properly, and whether app developers and providers had concerns about them. Once granted access, was the search and ranking algorithm of the marketplace transparent. Regarding rating systems on marketplaces, it asked if there were mechanisms to remove misleading reviews or hide “suppress” negative reviews.

Do commissions on in-app purchases hurt app providers: The regulator noted that both Apple and Google collected commissions on in-app payments and subscriptions. It noted the recent case of Epic Games’s Fortnite which was removed by Google and Apple from their stores for bypassing their payment systems. ACCC asked if the imposition of such a system affected the apps’ commercial viability.

Related coverage: