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End app store hegemony; Google-Apple monopoly needs addressing, but sans sideloading

India, as also other jurisdictions, need to frame the right legislation to allow both app stores and apps to thrive. Such legislation needs to keep in mind, as it tries to tackle the anti-competitive effects of app-store dominance, that an Apple has made significant investment to protect user-privacy.

End app store hegemony; Google-Apple monopoly needs addressing, but sans sideloading
So, if Apple can demonstrate how side-loading could unravel its carefully crafted security blanket, it has a right to be heard and considered. But, that in no way should translate into a licence to become a hegemon.

The dominance of Android’s and iOS’s app stores has meant a sizeable cut for Google and Apple, respectively, in the app economy. For perspective, the app industry recorded $143 billion in global consumer spend in 2020. Apple does not disclose the exact figures, but its “services” segment, which includes its app store, generated 19% of its total revenue of $274 billion in 2020.

Meanwhile, the Google Play Store generated $38.6 the same year. Increasingly, across jurisdictions, daily mobile-usage (a proxy for app usage) has been beating or giving stiff competition to TV viewing; no wonder, in 2020, investors poured $73 billion of capital into mobile-first companies. Thus, this is another reason why the stakes for Apple and Google from a thriving app economy are high.

But, sheer dominance of the two tech giants’ app platforms has brought with it a host of problems. From large commissions on in-app purchases eating into the app developers/vendors’ take to forcing app developers to use their payments systems, there are many issues that threaten competition—Apple and Google may also have app offerings competing in some areas—and thereby the vibrancy of the app economy.

This has elicited strong response from many jurisdictions. Recently, South Korea amended its laws to prevent app-stores from making it obligatory for app-makers to use their payment systems. There has been some damage control from the app-stores’ side as well—Google has slashed its commissions on subscription-based apps to 15% from the first day, instead of 30% for the first year (falling to 15% the second year onward), and it believes commission rates could come down to just 10% for apps that participate in its Play Media Experience Programme.

Juxtapose this with the 1-2% commission charged by most non-Google, non-Apple payment portals. No wonder app start-ups have been up in arms. Apple’s changing its anti-steering policy—thereby allowing apps to communicate directly with users on payment methods—is welcome, but jurisdictions like the EU still perceive enough Apple/Google hegemony to propose laws to permit side-loading (allowing smartphone users to download apps from the internet, outside the app stores).

Apple and Google could surely take a cue from Microsoft, which has commission rates as low as just 5%. App stores dictating rates to app-makers has a gate-keeping effect; for small developers, this becomes a determinant of survival. It is no wonder thus that fora like the Alliance of Digital India Foundation believe developers should be afforded “fairness and not benevolence in the form of “reduced” commission percentages,” and the determination of the commission-rate is left to the market rather than the app-store monopoly (depending on the OS of a phone).

India, as also other jurisdictions, need to frame the right legislation to allow both app stores and apps to thrive. Such legislation needs to keep in mind, as it tries to tackle the anti-competitive effects of app-store dominance, that an Apple has made significant investment to protect user-privacy.

So, if Apple can demonstrate how side-loading could unravel its carefully crafted security blanket, it has a right to be heard and considered. But, that in no way should translate into a licence to become a hegemon.

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First published on: 10-11-2021 at 05:00:33 am