No doubt Google Play and the Apple App Store are the biggest app stores worldwide, offering 3.1 million and 2.1 million apps respectively. It is their dominance in the apps market that has US Senators questioning the likelihood of abuse of power at the expense of smaller competitors. Federal and state lawmakers are now conducting hearings and considering legislation to weaken the companies’ app-store controls.
Why app makers have a problem with Apple & Google?
Several app makers have raised complaints regarding the tech giants’ demands for mandatory revenue sharing for sales of digital goods. Curators of Spotify, Match Group etc. are not happy with the strict inclusion of rules set by Apple’s App Store for iPhones and iPads, and have said that it is this dominance that gives rise to anti-competitive behaviour.
Spotify said Apple blocked it from telling customers that they could find cheaper prices outside its iPhone app. Match Group, which also the owner of Tinder dating app, testified that it has paid nearly $500 million a year to Apple and Google in app store fees.
Questioning this very supremacy, Amy Klobuchar, the top Senate Democrat on antitrust issues, said Apple and Google can use their power to “exclude or suppress apps that compete with their own products” and “charge excessive fees that affect competition”. A panel of US Senators has considered this dominance as a threat. Instead, they have raised concerns about the monopolistic behaviour.
At the hearing, representatives from Apple and Google came forward to defend their companies. They explained that the companies’ ‘tight control’ over their stores and the associated revenue-sharing requirements are a pre-requisite to enforce and pay for security measures to protect consumers from harmful apps and practices. The strict policies are designed to safeguard its consumers. They further went on to defend the practices, saying that they don’t duplicate competitors, that few apps pay their commissions and that this commission goes in funding the security of their app stores.
However, both Democratic and Republican senators were not convinced with the given clarifications. Senator Richard Blumenthal, a Democrat from Connecticut went on to say, “Google and Apple are here to defend the patently indefensible”. He added, “If you presented this fact pattern in a law school antitrust exam, the students would laugh the professor out of the classroom, because it is such an obvious violation of our antitrust laws.”
Apple also faced heavy criticism after other witnesses blasted the company’s practice of charging providers of digital goods and other services a hefty 30% commission on in-app transactions. It is the ascendancy that has led the two tech giants to experience several regulatory, legal, and public-relations headaches.
It seems the US government is fully committed to fighting monopoly in the tech sector. Stay tuned for latest news from all across the globe. You can also sign in for our newsletter to receive latest updates in your mailbox.