The Australian Competition and Consumer Commission (ACCC) has sent a scathing warning shot at app store providers Apple Inc (NASDAQ: APPL) and Google's parent, Alphabet Inc (NASDAQ: GOOGL) today.
App marketplaces were the focus of the competition watchdog's second Digital Platform Services inquiry interim report. The findings of which were handed out today.
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App store duopoly
The ACCC dug into the competition and consumer concerns surrounding the two key app marketplaces used in Australia: Apple's App store and Google's Google Play store. As many smartphone owners would know, these two app marketplaces are the go-to when it comes to downloading an app on your mobile phone in Australia.
Astoundingly, between the two companies, they account for close to 100% of the global market for mobile operating systems (OS). Google's Android OS holds roughly 73%, while Apple's iOS retains the other 27%.
Therefore, with mobile devices becoming integral to our daily lives, it's crucial to ensure fair competition exists. ACCC Chair Rod Sims' comments portrayed this, stating:
Apple and Google's stores are the gateways between consumers and app developers, and it's true that they provide considerable benefits to both groups. But there are significant issues with how this market is operating.
Some of the issues identified in the report included:
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Google and Apple's ownership of the marketplaces gives them the ability to promote their own apps over others.
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Control over the terms that their competitors must comply with to gain access to stores
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Restrictions imposed by Apple and Google means developers have no choice but to use their payment systems for any in-app purchases.
The criticisms didn't end there either. Rod Sims also stated that Apple and Google could do more to remove malicious apps and improve dispute resolution for consumers.
Apple and Google's to-do list
Following the findings, the ACCC curated a list of potential measures for the two companies to enact. Some of these are listed below, with all the items listed on page 16 of the report.
- To address inadequate payment option information and limitations on developers
- To increase transparency and address the risk of self-preferencing in-app marketplace discoverability and display
- Provide an option for consumers to rate and review first-party apps.
Making sure it's not swept under the rug, the ACCC will revisit the issues during its five-year digital services inquiry. At that time, the watchdog will evaluate whether Apple and Google have made good on the findings.
