Lets face it, Google Play Store and Apple’s App Store are our go-to app stores for almost all the apps we download. But now Australia’s consumer watchdog, the Australian Competition and Consumer Commission (ACCC), has released a report saying the two companies’ dominance in the app market represents an unfair gateway between developers and consumers.
The ACCC’s announcement is based on findings from its second Digital Platform Services Inquiry Interim report that examined the operation of the Apple App Store and Google Play Store in Australia. It outlined some big problems with having only two players dominating access to almost everything.
According to the report, the main concerns were: the market power of Apple and Google; the terms of access to app marketplaces for app developers, including the payment arrangements, the effectiveness of self-regulation, arrangements to deal with harmful apps and consumer complaints; and concerns with alleged self-preferencing and the use of data by the two companies.
The report said developers are significantly disadvantaged by the fact that there are few alternatives for them to reach consumers to sell their apps, leading them to accept the terms offered by the “gateway” stores. Google with its Android OS, and Apple, with its iOS operating systems account for approximately 50% each of Australia’s app market for mobile OS, the report stated.
Key developer concerns highlighted in the report included: the unfair terms that they were subject to in listing their apps on the stores, including restrictions on their ability to access the users of their apps, and a lack of transparency in the policies and processes governing the app review and approval process. Developers also raised concerns that there were inadequate avenues to resolve disputes, the report stated.
Concerns around self-preferencing are centred around the discoverability and ranking of first-party Google and Apple apps versus apps from third-party developers, with suspicions that first-party apps fare much better. While the ACCC investigation could not verify self-preferencing was taking place, it suspected it may well have been.
The report alluded to customers also losing out by the two companies’ market dominance, by having less choice over apps that appear in the in-store search results and little control over the default apps loaded on their devices upon purchase, and by not having access to alternative payment systems when buying apps.
The ACCC recommended a number of changes that Google and Apple could make to their stores to even out the playing field. They included, for the companies to give consumers more control over pre-installed apps on their devices, and the ability to rate and review first-party apps to allow third-party apps to compete, based on their merits.
In regards to a fairer playing field for developers, the report also recommended that the Google and Apple app stores be obligated to provide users with information about alternative payment systems, and for Apple and Google to provide more transparency about the key algorithms and processes that determines what makes apps discoverable in-store.
Commenting on the findings of the report, ACCC Chair Rod Sims said, “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.”
“We have identified a number of areas where action is required and have put forward potential measures to address areas of particular concern. There is a window of opportunity for Apple and Google themselves to take steps to improve outcomes for app developers and consumers by adopting the potential measures we have identified,” said Sims.