Apple, Google face action over app stores

The ACCC says it has significant concerns over the tech giants’ market power, and that fresh laws may be needed.

The ACCC has found both Apple and Google enjoy significant market power. (Photo by Lionel BONAVENTURE / AFP)

Australia’s competition watchdog has flagged potential regulation and new laws to deal with Apple and Google’s app store duopoly, with the ACCC highlighting “significant concerns” in a new probe into the tech giants’ market power amid new action in both the US and Europe.

According to the ACCC‘s second Digital Platform Services Inquiry interim report, released Wednesday, both Apple and Google enjoy significant market power in Australia, and have the ability and incentive to promote their own apps over others, and control the terms of their competitors’ ability to gain access to their stores.

The watchdog has handed down a number of recommendations to Apple and Google, and has called for new laws should the companies fail to comply.

“If consumers use an Apple mobile, they can only download apps from the Apple App Store. For other consumers using a mobile running the Android OS, the main place they download apps from is the Google Play Store.” ACCC chair Rod Sims said in a statement.

“To address this market power, we believe app developers should have more information about how their apps are made discoverable to consumers and that consumers should have the ability to change or remove any pre-installed or default apps.

“Apple and Google should also be prevented from using information collected about third-party apps to advantage their own competing apps.

“The ACCC is also concerned with restrictions imposed by Apple and Google which mean developers have no choice but to use Apple and Google’s own payment systems for any in-app purchases.“

The watchdog has flagged potential measures for the tech giants to implement themselves before potential regulation, including that consumers be able to rate and review all apps, that consumers have the ability to change any pre-installed default app on their device, that app developers be allowed to provide consumers with information about alternative payment options.

It also wants information collected by Apple and Google in their capacity as app marketplace operators to be ring-fenced from their other operations.

“We have identified a number of areas where action is required and have put forward potential measures to address areas of particular concern. There is a window of opportunity for Apple and Google themselves to take steps to improve outcomes for app developers and consumers by adopting the potential measures we have identified,” Mr Sims said.

“The ACCC will also take into account significant proposals and law changes in other countries which have identified similar concerns. Regulation may be required if Apple and Google fail to take steps to address the concerns identified.“

Apple and Google were contacted for comment. Apple said in a statement it “welcomes the opportunity to continue this discussion with the ACCC.”

It comes just days after a panel of US senators questioned officials from Apple and Google‘s parent company Alphabet about the dominance of their mobile app stores and whether the companies abuse their power at the expense of smaller competitors, with the US mulling potential new regulation under president Joe Biden.

Meanwhile European Commission will issue antitrust charges against Apple over concerns about the company’s App Store practices, according to a report from the Financial Times.

Peter Lewis, director of the Centre for Responsible Technology, said the latest report was part of a larger wave of reviews from the ACCC addressing the market dominance of ‘Big Tech’.

“The model of giving companies the option to address the issues before regulation is consistent with the ACCC response but it‘s important that if the industry doesn’t address these issues there needs to be regulation,” he said.

“That‘s what occurred with the news bargaining code, and what should occur with other elements like disinformation, and the case in front of us here with app stores.”