Unless Google and Apple unbundle their service, they will increasingly be liable to many more lawsuits.
It is difficult not to be nostalgic about Microsoft’s announcement of shutting down Internet Explorer after over two decades of operation. It was the gateway to the internet for most people. It was also a source of pain for many, but there was little choice as Microsoft had started bundling the service. By 2003, it controlled 95% of the market. Although Microsoft began to lose share by 2005, unbundling of services dealt the final blow. Google and Mozilla created their browsers, and Microsoft could no longer deal with the competition. By 2018, it controlled only 3% of the market. Despite updates, it hasn’t been able to regain the lost ground.
Microsoft will continue to operate its new browser Edge, but the monopoly it enjoyed has disappeared. Microsoft’s announcement to shut down IE comes at a time when two tech giants, Apple and Google, find themselves in the same predicament.
Last week, both were sued by Epic Games, makers of popular online game Fortnite for anti-competitive practice. Both have banned Fortnite from their respective app stores, as Epic Games refused to direct payments via their platforms, and instead used its own website for purchases.
While Epic Games has argued that 30% commission that Apple and Google charge is too high a rate, the OS makers contend that they do not charge any listing fees, and this is the only way they can allow listings, check for malicious apps, etc.
Although both are right in their stead, many believe that this is the first of many lawsuits Apple or Google may face. Earlier, Google was sued by Blue Mail for not allowing listing on the platform and stealing its features for its Gmail app. As the app economy takes off, lawsuits may become common parlance, as commissions and rules are starting to become an irritant for many players.
But there is some learning from the Microsoft episode. While the companies certainly need to be rewarded for their contribution in creating a listing place, they need to unbundle some of these services and allow app makers to choose how they wish to compensate Google. If an app creator pays a listing fee, then Google and Apple must enable them to redirect payments via other platforms. Instead, Google and Apple can charge an annual subscription.
Pricing indeed is an issue, and there is no way to determine whether the services provided by Google or Apple should translate into 30% commission, but this can be adjusted by introducing a bit of competition.
A freeing up of OS’ to allow other app stores, may help. Amazon or Xiaomi, if they have better services, need to be allowed to compete with Google and Apple’s app stores. In any case, the companies do have a first-mover advantage, which cannot be easily countered.
The government also has a role to play. As apps are coming under scrutiny from governments over security, they need to come together to create a fund to check for malicious software and security lapses. A collaboration between academia, corporate and government can go a long way in conducting security audits for apps.
However, if all this is to happen, users must also be ready to move beyond the free model.