Apple and Google abuse market dominance, says Japan antitrust regulator
A Japanese Fair Trade Commission report stops short of directly ordering that Apple must allow a third-party App Store, but its investigation clearly concludes that one is necessary.
Apple Store in Japan
Apple and Google have been under investigation by the Japanese Fair Trade Commission (JFTC) since October 2021, chiefly regarding their app store dominance. The regulator has now published its findings, which are critical of both firms' "abuse of a superior bargaining position."
The JFTC says that the current business models of both companies is a "problem under the AMA," the country's Antimonopoly Act. This is the same act that led to Apple being accused of violations in its allegedly "anti-consumer" dealings with local cell carriers in 2018.
In a detailed examination of Apple's App Store and the Google Play Store, the JFTC makes many recommendations for changes. It does not explicitly say that the companies must allow alternative app stores, yet complying with its findings would require exactly that.
In a section concerning the "prevention of self-preferencing in the app market," the JFTC report says that an "equal footing regarding App store management" must be ensured.
"[This includes making] it possible to use or select a system other than Google's/Apple's in-app payment system and/or Google's/Apple's in-app payment system," says the report, "and separately setting the commission of using the in-app payment system and the commission of using app store."
Further, "it is desirable for Google and Apple" to continue "to bring about innovation without hindering the creation of new products or services and the construction of new ecosystems centered on such products or services by developers other than Google and Apple."
The report also says that Apple and Google must not take advantage of features that are not also available to developers.
"[They must permit] access to the mobile OS functions at the same timing, scope and level as Google's/Apple's apps, products and services," it continues, "so that other developers' apps, products and services can be interoperable with the mobile OS."
Japan's regulator does allow that this may not always be possible, however. It adds "except when justifications are recognized from the viewpoint of security assurance and privacy protection."
Thursday's report is not an enforcement action. The report must be further evaluated and discussed by the Japan government before action is taken. A timetable for that review and action isn't clear.
Apple has not yet commented on the report from Japan's Fair Trade Commission.
Read on AppleInsider
Apple Store in Japan
Apple and Google have been under investigation by the Japanese Fair Trade Commission (JFTC) since October 2021, chiefly regarding their app store dominance. The regulator has now published its findings, which are critical of both firms' "abuse of a superior bargaining position."
The JFTC says that the current business models of both companies is a "problem under the AMA," the country's Antimonopoly Act. This is the same act that led to Apple being accused of violations in its allegedly "anti-consumer" dealings with local cell carriers in 2018.
In a detailed examination of Apple's App Store and the Google Play Store, the JFTC makes many recommendations for changes. It does not explicitly say that the companies must allow alternative app stores, yet complying with its findings would require exactly that.
In a section concerning the "prevention of self-preferencing in the app market," the JFTC report says that an "equal footing regarding App store management" must be ensured.
"[This includes making] it possible to use or select a system other than Google's/Apple's in-app payment system and/or Google's/Apple's in-app payment system," says the report, "and separately setting the commission of using the in-app payment system and the commission of using app store."
Further, "it is desirable for Google and Apple" to continue "to bring about innovation without hindering the creation of new products or services and the construction of new ecosystems centered on such products or services by developers other than Google and Apple."
The report also says that Apple and Google must not take advantage of features that are not also available to developers.
"[They must permit] access to the mobile OS functions at the same timing, scope and level as Google's/Apple's apps, products and services," it continues, "so that other developers' apps, products and services can be interoperable with the mobile OS."
Japan's regulator does allow that this may not always be possible, however. It adds "except when justifications are recognized from the viewpoint of security assurance and privacy protection."
Thursday's report is not an enforcement action. The report must be further evaluated and discussed by the Japan government before action is taken. A timetable for that review and action isn't clear.
Apple has not yet commented on the report from Japan's Fair Trade Commission.
Read on AppleInsider
Comments
To those who say, "well, YOU don't have to use a third party app store, so what are you worried about?", you further miss the point. We share significant amounts of content between friends and family. So my contact information, shared photos, contents of mail and text messages, and more, reside on my wife's, kids, and friends phones (all iOS) There is a greater level of trust to do so given the intrinsic security of the shared ecosystem. So it "someone else" starts using unvetted apps from a third party app store which does a lot of harvesting, you are indirectly harmed even if you yourself do not use a third party store.
For those that do, how does Apple address the aforementioned "security assurance and privacy protection" by allowing unvetted apps on the store? Do they allow unfettered access to all API's/tools/data? Do they cut off access to Contacts, Wallet, Messages, Mail, Photos, Files, and more to try and protect the ecosystem? What becomes exploitable by allowing a "front door" into iOS for third party app stores?
I don't think many people think about the ramifications of this, and more fundamentally, this is product and feature of the Apple's / Google's businesses. To what level do we want governments, including unelected regulators, putting their hands on the wheels of free enterprise, innovation, investment, customer relations, and success? It is a very dangerous manner of thinking.
And where is there a vast majority of users even complaining about this? These is no cacophony, not barely a whimper... Most people are fully aware of the ecosystem, enjoy it , and feel well served and protected by it.
Let others innovate a better solution/ecosytem in the open market.
The Apple ecosystem built from the ground up by Apple used for free by their competition with no real oversight by Apple, with equal access given to the OS and the hardware. It’s called the 1% capitalistic, lobbyist reshuffle when things don’t go your way in the marketplace.
Apple is unique however, in that are last man standing in modern computing with a vertical structure in that they make their own OS and they make their own hardware to go with it, the rest of the industry is built differently, and they politely through government lobbying would like Apple to drop down to that same level of mediocrity.
And if they wanted to make up revenue from lost App Store sales, they could start jacking up developer account fees and even start charging for the developer tools.
Apple should be able to charge these third party stores “rent” for being on iOS. But then, I’m sure there would be an outcry that Apple is charging.
Maybe Apple can just argue that they have to delay APIs' promotion to public status because the APIs haven't been through a full security audit yet.
Mind you, there have been several developers complaining about the state of Apple's documentation, so maybe it wouldn't be a bad thing to have some government prodding in this area.
Apple's current system just doesn't allow any of that. And it's been going great for fifteen years. Just like Target's been going great with a strictly curated selection of merchandise, Target-only payment registers, and Target's fat markup (bigger than Apple's, that's for sure). How many Target customers are clamoring for it to be all screwed up by antitrust regulators? The only people who would ever call for that are people who don't like Target, don't even shop there, and want to see it ruined for the people who do.
Maybe the meaning of "commission" loses some of its meaning when translated to Japanese. But neither Apple or Google charges a "commission" for using their app stores. The "commission" is charged on the revenue developers derive from using Apple and Google IP. Which would be the iOS platform and Android platform. Over 90% of the apps in either app stores are free and those app developers are not charged a "commission", even though they are using Apple and Google app stores to distribute their free apps. It wouldn't matter if developers used third party app stores to make money, they would still be using Apple and Google IP. And Apple and Google should have the right to charge for using their IP to make money, even if the app uses a third party app store.
Don't Japan and other countries (including the EU) that are looking into this "commission" matter, find it ironic that the biggest crybabies complaining about the "commission" (and only on Apple and Google platforms), are the ones that are making millions of dollars a year and had made 100's of millions over the years, (this after paying the commission) with their apps in the app stores? Where are the consumer uprising in any of these countries, protesting the higher cost of apps because the developers have to pass on the "commission" to the consumers? Where are the consumes complaining about having to purchase all the apps they need from one app store, rather than having the privilege to search for them across a half a dozen different app stores, with each of them requiring the customers credit detail for payment?
Over 95% of total app store revenue (for both Apple and Google) are generated by the biggest most profitable 2% of developers. Over 90% of developers bringing in revenue from the app stores, are paying only a 15% commission (which includes processing of payment) because they generate less than $1M in app revenue/a year. Just exactly who do these governments think will benefit the most, with a lower "commission" or none at all? Do these governments actually think these multi-billion dollar companies with money making apps in the app stores, are looking after the small developer? Or the consumers?
Some of these links are a few years old, but things haven't really change that much over the years. If anything, the numbers has gotten more skewed toward the few big developers owning a bigger piece of the pie.
https://www.pocketgamer.biz/comment-and-opinion/79396/linda-ouyang-overcoming-the-challenges-facing-todays-small-independent-mobile-game-developers/
https://sensortower.com/blog/app-store-one-percent
https://www.cnbc.com/2021/03/16/google-apple-giving-up-less-than-5percent-of-revenue-from-apps-with-pay-changes-estimate.html
https://www.digitalinformationworld.com/2020/12/98-percent-of-apple-app-store-games.html
One thing I’ve noticed over time since the creation of the Apple Store, is that many of the larger developers hate it when they’re sitting side-by-side with programs designed by smaller companies and they don’t get the little party favors that they are used to getting, it just eats them up inside and that is definitely one of the things driving this movement.