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<\/p>\nApple and Google have put a stranglehold on our mobile phones. Their app stores and operating systems have become so dominant, Congress and statehouses are calling executives to come testify and explain themselves at a record pace.\u00a0<\/p>\n
Multiple states are now advancing bills aimed squarely at Apple and Google\u2019s anticompetitive practices, and app developers are challenging Apple\u2019s policies in courts.\u00a0<\/p>\n
This scrutiny is long overdue. It\u2019s time to set fair rules for the sake of consumers and businesses that use these platforms.<\/p>\n
When the iPhone was launched in 2007, there was no such thing as an app store. People were still using mobile phones primarily for calls and texts. That\u2019s far from reality today, as apps are now the backbone of any smartphone. Whether you\u2019re browsing the internet, sending an email, messaging a friend, mapping out a road trip\u00a0or streaming music, you\u2019re likely doing it with an app.\u00a0<\/p>\n
Virtually all smartphones run on either Apple\u2019s iOS or Google’s Android mobile operating systems. This has been the case for nearly a decade. A consumer typically uses either an Apple or an Android smartphone, not both at the same time. That gives Apple and Google absolute control over the terms and conditions for almost all transactions on smartphones. Smartphones have become the linchpin of our digital ecosystem, and the apps on smartphones are increasingly the primary mode for consumers to access online services \u2013 both inside and outside their homes.\u00a0<\/p>\n
This domination of the mobile marketplace is highly lucrative. Apple\u2019s gross app store revenue in 2020 increased to over $70 billion, and Google\u2019s up to nearly $57\u00a0billion.\u00a0<\/p>\n
So it\u2019s not terribly surprising that the two have imposed rules for their app stores that entrench their dominant positions at the expense of their captive users \u2013 both the consumers who use their smartphone systems, and the businesses that sell apps and services to them.\u00a0<\/p>\n
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iPhones on Sept. 16, 2016, in Chicago. (Photo: Kiichiro Sato\/AP)<\/span><\/p>\n One example of this unchecked power is that Apple and Google prohibit payment solutions\u00a0in their app stores\u00a0other than their own. This enables them to charge a 15% to 30% service fee\u00a0on sales through their app stores, and on an ongoing basis on digital sales via apps.\u00a0<\/p>\n Consumers face higher prices when part or all of these fees are\u00a0passed on to us. Paying this higher price is not a choice that people\u00a0actively make. They often aren\u2019t even aware that they can buy the same service for a lower price, or with added benefits, outside the app store. That\u2019s because Apple\u00a0and Google explicitly prohibit app developers from communicating this fact to consumers.<\/p>\n Rampant bias: <\/strong>Big Tech algorithms limit our lives and choices. Stop the online discrimination.<\/span><\/em><\/p>\n Lawmakers should prohibit Apple and Google app stores from mandating this payment exclusivity. A number of recently proposed state bills would do exactly that. Across the pond, both the United Kingdom\u00a0and the European Commission are investigating Apple\u2019s app store policies.<\/p>\n But the problems don\u2019t stop there. Apple and Google\u2019s own apps are often set as the default choice.\u00a0Those apps don\u2019t have to pay the 30%\u00a0commission, and they may get preferential ranking in app store search results. Third-party apps are artificially disadvantaged. Consumers might\u00a0not end up buying or using apps that best serve their needs.<\/p>\n That\u2019s why we need market rules to ensure that third-party apps can compete with Apple and Google\u2019s own apps on fair terms. This should include nondiscrimination requirements and restrictions on the use of marketplace data to compete in the retail market. Some state bills, like one in Massachusetts, would do this.<\/p>\n These rules should restrict self-preferencing for Apple or Google’s own apps in store search results and in setting default apps for key functions like email, search\u00a0and smart voice assistants. Third-party apps should also have equivalent access and interoperability with the underlying mobile operating systems and mobile device functions, like payment chips and Bluetooth capabilities, to Apple and Google\u2019s own apps.\u00a0<\/p>\n Failure to enforce: <\/strong>Despite COVID-19 pandemic, tech giants still profit from anti-vaccination movement<\/span><\/em><\/p>\n This would allow businesses other than Apple and Google to innovate freely on smartphones, leading to more innovation by all companies \u2013 big and small \u2013\u00a0to the benefit of consumers.\u00a0<\/p>\n These targeted solutions would strike the right balance between introducing more competition on smartphones and preserving Apple and Google\u2019s incentives to keep developing their mobile ecosystems.\u00a0Lawmakers at the state and national level need to take action to help balance the playing field and create a marketplace that is more fair and competitive for all.<\/p>\nThird-party apps must be competitive<\/h2>\n