Will new competition laws make your digital life cheaper?

The federal government has proposed new laws that will “designate” tech giants that engage in anti-competitive practices or abuse market power, obliging them to comply with special rules or face steep fines.

The move follows regulatory action around the world, which has been watched closely by the Australian Competition and Consumer Commission, to keep tech giants from developing massive platforms they can then exploit by demanding high seller fees or locking out rivals. So, if developers all of a sudden don’t have to pay 30 per cent to Apple or Google for using the app store, will goods on your phone get cheaper?

Apple’s App Store is the only way to download new apps on iPhones in Australia, and a percentage of anything you pay to developers and service-providers goes to Apple.Credit: Bloomberg

The laws, which are up for consultation, will probably be similar to legislation recently enacted in the European Union that limits certain “gatekeeper” companies from engaging in practices that curb competition. In theory, this would force Apple and Google to allow app stores other than their own on iPhones and Androids, and make sure the playing field was even. It should also mean alternative payment providers, so your money doesn’t have to go through Apple or Google to get to the seller. This all should, again in theory, make almost everything you pay for on your phone through the app store cheaper. But that hasn’t happened yet.

The deadline for companies to begin complying with Europe’s Digital Markets Act was March this year, and to say Apple and Google have been dragging their feet would be putting it lightly.

Apple’s initial strategy was to allow alternative app stores, but to make that so scary, laborious or costly that developers and users alike would choose not to use them. Since it stood to miss out on revenue if popular apps left its store for another, it created a new “core technology fee” that successful developers on alternative stores would have to pay to Apple, which in some cases would be bigger than the cut they pay on the App Store.

Meanwhile, iPhone users in the EU have to jump through a number of hoops to install an alternative app store, including multiple screens asking them to accept the risks of moving away from Apple’s protection inside its walled garden, and the need to adjust values in their settings app. Tim Sweeney, founder of Epic Games, which has been waging a legal battle for years to avoid paying fees to Apple and Google, has deemed Apple’s actions “malicious compliance”.

Android phones have always allowed other app stores, but Google has been accused of illegally preferencing its own.Credit:

That said, users in Europe can now download the Epic Store to their iPhones and play Fortnite. But beyond a few providers that let you pay for and download apps directly from a browser, almost every app and content subscription you pay for on your iPhone still goes through Apple in Europe.

Android, for its part, has long allowed alternative app stores and apps not officially vetted by Google. When the Digital Markets Act came into effect, it did make certain changes in Europe, including allowing apps from the Play Store to send users outside Google’s ecosystem to make payments. But the huge majority of users still go through Google.

In the US last month, a court determined that the Play Store was an illegal monopoly, and ordered a number of remedies that went even beyond the scope of the Digital Markets Act. Essentially, they meant Google had to bow out of the app store business in the US for three years, while hosting rival app stores inside its own Play Store, and allowing any rival to sell the full catalogue of Play Store apps. Epic and Microsoft immediately planned to take advantage of this, but Google has been granted a stay so it can appeal.

Change is happening very slowly, and the newly proposed Australian laws will probably put us where Europe was years ago. Making smartphones a truly open ecosystem, like home computers, would cost Apple and Google billions. Governments can and will fine for non-compliance (Apple is reportedly about to be hit in the EU for failing to let app developers point to less expensive payment options outside the App Store), but their game will be to slow progress as much as possible, and only give as much ground as absolutely necessary.

Get news and reviews on technology, gadgets and gaming in our Technology newsletter every Friday. Sign up here.