White House says Apple and Google's app stores are anticompetitive

The Department of Commerce’s National Telecommunications and Information Administration (NTIA) has criticized the current mobile app store ecosystem. A report published by the NTIA voices concerns about the duopoly of Apple and Google, it says that the companies are harming both users and developers, and wants to address the problem by enforcing some new policies.

The Biden Administration isn't the first to criticize the Silicon Valley giants to ease up on their anticompetitive nature, the pressure has been piling from the European Union for a long time. The EU passed a Digital Markets Act last year, which will come into effect in March 2024. It will force gatekeepers to allow their users to side-load apps on their devices via third-party stores and sources. While Android already does allow sideloading apps with APKs, this would be an entirely new world for iPhone and iPad users, and as such is seen as a welcome change.

Preloaded apps, closed ecosystems and antitrust issues

The PDF report that you can download from NTIA's website highlights the competition in the Mobile App ecosystem. It notes that by manufacturing its own device which ships with its in-house operating system with preloaded apps, Apple has significant competitive advantages, as it includes apps that are set as defaults. Google likewise partners with manufacturers, and includes several preloaded apps in Android devices, as part of an agreement with the OEMs, and this too results in several of its apps set as defaults. While it acknowledged the security of Apple's closed ecosystem, commonly referred to as a walled garden, the report also mentions that it limits the choices of apps available for users. Despite Google allowing third-party app stores/sources on Android, 90% of apps originate from the Play Store.

President Biden wrote an op-ed piece on The Wall Street Journal saying, "When tech platforms get big enough, many find ways to promote their own products while excluding or disadvantaging competitors—or charge competitors a fortune to sell on their platform."

The report from NTIA also pointed out that the two gatekeepers of the operating systems, iOS and Android, have restrictions that are unfair to other app developers. This includes security limitations that users may have to jump through to install apps, and in iOS' case, limited access to APIs which are used by Apple's own apps, but are not available to other app developers.

Microsoft caught some strays in the report as the NTIA observed that many Windows-exclusive apps had at one time proved to be a barrier in the operating system market many years ago, which eventually opened up to allow more third-party programs including browsers to enter the foray, leading to a competitive market.

NTIA says Apple and Google's app store fees are negatively affecting developers and users

While quoting statements from the Epic-Apple feud, which resulted in various details about the fees imposed by Apple and Google's app stores, the NTIA noted that the two tech giants earned a significant amount of revenue and profit from their mobile app ecosystems. It also states that the operating margins of the stores were extraordinarily high, and nothing from the companies have justified the costs claimed by them. The report also talks about the in-app payment systems, and transactions which go through Apple and Google's stores, saying that they benefit no one but the companies themselves.

Overall, the report pushes for the need for a fair, innovative and competitive market without any barriers for developers, and inflated prices. It calls for alternative means to distribute apps, to limit preloaded apps (reduce the number of apps?). It also recommends allowing third-party app stores, and options for users to sideload apps, fair mobile app store review processes, more ways to purchase in-app contents, stronger antitrust enforcement and interoperability.

Representatives from Google and Apple have disagreed with the report's findings, and defended their respective app stores.

In case you didn't know, Google charges developers a one-time fee of $25 to host their apps on the Play Store. Apple, on the other hand, charges $99 per year, you have to pay an annual fee, even if your product is free to download from the App Store. And there is the review process imposed by both stores. I'd say the App Store's review process is a bit more thorough, and malware apps don't slip through as easily. The Google Play Store however has seen plenty of malicious apps, even though the company claims Play Protect scans several thousands of apps every day.

We have also seen both Apple and Google flex their muscles unfairly to strong-arm developers to their rules. The most notable example from recent times would be Total Commander on Android, which was forced to remove the ability to install APKs. An example for a bigger is when Telegram's founder Pavel Durov alleged that they were unable to release major app updates on time, because Apple was delaying them on purpose.

The biggest issue however is the fact that both Apple and Google charge a 30% commission for all transactions made via their respective app stores. Neither of them have been developer-friendly, especially Google, many developers have claimed that they were unable to reach to an actual person at the Mountain View company to appeal or reverse unfair app bans that they claimed were automated, and eventually led to their app being removed permanently from the store.

Apple hasn't been particularly impressive either. It increased App Store prices in some countries. And what do developers do? They push the burden onto their users by setting high prices or increase the cost of subscriptions, while the Cupertino company gets its cut from the developers. The availability of third-party stores with reduced prices could provide an increased profit for developers, and in turn would also help end users, who can buy apps and subscriptions at lower rates.

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