A bipartisan group of legislators is looking to improve competition within app stores and lower barriers to entry for developers in the market for mobile apps, though the reality of the bill’s impact is decidedly less clear. The Open App Markets Act would require that companies — namely Google and Apple — allow applications to be downloaded onto their operating systems from sources other than their respective app stores in a process known as sideloading. The bill also prohibits companies from requiring that apps facilitate in-app transactions through an operating system’s own payment mechanisms — an issue that took center stage in the 2020 lawsuit in which Epic Games sought to bypass the 30% revenue cut taken by Apple’s app store by implementing an external payment process. While the intention may be to promote competition, this bill misrepresents current industry standards by targeting practices of two major companies which are commonplace among competitors. The consequences of this action will fall on consumers, who will lose the ability to choose preferred methods of obtaining mobile apps by forcing identical business models between competing companies.
Approximately 85% of apps listed on the Apple App Store do not charge consumers or enable in-app purchases of any kind, meaning the commission fees for which this bill seeks to provide alternatives are irrelevant to the vast majority of developers utilizing the marketplace. Because of this, the 1.8 million apps available on Apple’s platform can reach billions of iOS users worldwide at a low cost. However, for those which do enable transactions — many of which operate within the realm of mobile games similar to those offered by Epic — the fees imposed by the Apple and Google app stores both currently operate at or below levels consistent with the standard set by the market. Apple and Google both collect 30% commission on digital goods and services and both implement a model where fees on subscriptions fall to 15% after a year. Both companies also lower fees to 15% for developers making under $1 million in revenue in order to lower barriers to entry for small developers. This is on par with the 30% fee charged by the Samsung Galaxy Store, Amazon App Store, and gaming platforms such as the Microsoft Store on Xbox consoles and the PC gaming store Steam.
In addition to disrupting current industry standards, efforts targeting Apple and Google’s app stores disregard the impact the bill will have on consumer choice in the market for mobile devices. Sideloading apps from sources other than Apple and Google’s approved listings is a useful feature for those who want to customize their devices and maintain a higher level of control over software installed, but there are significant security risks associated with doing so which are left unacknowledged by the Senate legislation. Google’s Android operating system currently allows users to enable the ability to sideload apps from unknown sources, but users doing so assume the risks associated with downloading untested software, potentially exposing their devices to malware. App store review processes are in place to ensure that apps work as intended and do not pose harm to users prior to becoming available to consumers. When sideloading, users have a limited amount of information about the applications source and content, and if the app has not been through the approval processes needed to list an app on a major app store, it is all too easy to misrepresent the content of the app, exposing consumers to potentially dangerous applications. This risk is heightened on any app which requires transactions, as payment information can be easily compromised by unknown third parties when operating outside an operating system’s payment platform. In 2020, Apple’s app review process rejected more than 48,000 apps containing hidden content or undocumented features, as well as 215,000 for privacy concerns, which Apple says saved consumers more than $1.5 billion in fraudulent transactions.
Despite the risks, the autonomy that comes with the Android model is a draw for many consumers as they choose between competing mobile operating systems. For the more tech-savvy consumer, security risks can be mitigated by the ability to make informed choices, and the results can be an enhanced level of functionality on mobile devices which are therefore customized to meet the needs of the individual user. But the average consumer may not want to weigh the benefits and risks of every download they make. App stores which are designed for the specific operating system ensure a level of security, and the payment systems used make it so that financial information is not compromised by exposure to unknown third parties. By requiring that Apple follow the lead of Google and enable sideloading on their devices, consumers lose the option to take advantage of this ensured security and will be open to malware — a practice which Apple has reported results in Android devices having an estimated 15 to 47 times more infections from malicious software compared to their iOS counterparts.
A common critique of this bill is that by targeting only two major companies, the Senate is artificially deciding winners and losers in a market where competition is already present. By manipulating the market to require identical business models by leading app stores, this critique appears especially salient. The assurance of safeguards for privacy and security is a feature of Apple products, and if a consumer feels confident in their ability to monitor their own security risks when downloading unapproved applications from third-party sources, switching costs to another operating system are relatively low from an antitrust perspective. It is thus not the role of Congress to regulate what is considered an ideal business model in areas where innovation and competition are present, particularly when that regulation exposes the everyday consumer to significant security risks.
