Opening up the app store
Each month, Digital Bulletin analyses one of the digital policies that countries are enforcing with the goal of regulating the online world. In this issue, we look at the Open App Markets Act
The internet is a vast space with infinite potential for innovation, particularly when it comes to smartphone applications. However, at the moment, two companies have full control of the two dominant operating systems, which allows them to exclusively dictate the terms of the app market.
Last August, a bipartisan group of US senators introduced a new bill that aims to address this issue. The draft piece of legislation, known as the Open App Markets Act (OMA), was led by senators Richard Blumenthal, Marsha Blackburn, and Amy Klobuchar, with the goal of shaking up the structure of Google and Apple’s mobile operating systems.
“This legislation will tear down coercive anticompetitive walls in the app economy, giving consumers more choices and smaller startup tech companies a fighting chance,” said Blumenthal.
The proposed legislation would require Google and Apple to allow third-party apps and app stores within their operating systems, as well as prevent them from blocking developers that tell users about lower prices for their software that they could find outside official app stores. Moreover, the two tech giants will be banned from leveraging non-public data collected via their systems to create competing apps.
The OMA is a direct response to the many complaints of mobile software makers, who have long claimed that app stores take an unfair cut of the cash that should be flowing directly to developers. In addition, the piece of legislation is more relevant now than ever, shortly following the Senate antitrust hearing on app stores and competition, and in the midst of Apple’s public dispute with Epic Games.
“The power of large app stores to extract enormous profits is a direct result of the anticompetitive and unfair way in which the stores are operated and controlled,” says Alex Harman, Competition Policy Advocate at Public Citizen. “This bipartisan legislation will open up the app stores to more competition, protect small app developers, and lower prices for consumers.”
Although the OMA targets Google and Apple equally, experts agree that the legislation is likely to have a greater effect on the latter company, as sideloading has always been possible on Android. In contrast, Apple has never allowed sideloading, saying it is a measure taken to protect users from malware and other threats.
“The act will have a more significant impact on iOS users than Android,” says Paul Bischoff, privacy advocate at Comparitech. “It would force Apple to allow iPhone and iPad users to download and install apps from outside the app store. That creates more opportunities for other app stores and apps not on the official App Store to compete.
“I think allowing sideloading is a good thing. Most users will still opt for the official app store, but users who want to use other app stores and apps have the option of doing so.”
Nonetheless, the OMA is not the first piece of legislation of its kind. The draft law continues a series of regulatory initiatives such as the EU Digital Markets App and the UK’s digital markets plans that aim to prevent Big Tech from obtaining “undue advantages” from the use of digital platforms under their control.
“These regulatory initiatives are generally to work in conjunction with competition policy tools, which remain applicable but have obviously been deemed as insufficient in the fight against potential abuses by Big Tech,” explains Alina Popescou, a partner at legal firm MPR Partners. “Whilst the said proposals have common denominators — such aiming to ensure competition between app stores via interoperability — they differ considerably in places.
“For instance, unlike the DMA and the UK Proposal, which target companies with entrenched and durable positions on the market, the OMA seems to be simply addressed to all companies controlling app stores with a certain number of users in the US. Whilst this approach may offer more legal certainty and less complex procedures for designation of gatekeepers, it is bound to have the highly interventionist, ex ante policy options enshrined in the OMA applying to companies whose positions may in reality be contestable.”
All around the world, governments are making moves to regulate Big Tech and foster competition in the digital space. However, by doing so separately, they are also increasing the complexity of the technology regulatory framework. If all these laws are passed independently, the potential differences between the various jurisdictions regulating digital platforms may well become a nightmare not only for Big Tech, but also for consumers and technology companies acting on either sides of the markets concerned.
Countries have a common goal: regulating Big Tech. But will they be able to do it in cooperation? Only time will tell.
