UK regulators are concerned that Apple’s App Store hosts unfair practices for UK developers.

In a press release published by the Competition and Markets Authority (CMA), the UK watch dog stated its intention to examine the ‘complaints that Apple’s terms and conditions for app developers are unfair and anti-competitive’. A CMA representative reveals that the group will ‘consider whether Apple has a dominant position’ and what can be done to protect app developers in the future:

‘The CMA’s investigation will consider whether Apple has a dominant position in connection with the distribution of apps on Apple devices in the UK – and, if so, whether Apple imposes unfair or anti-competitive terms on developers using the App store, ultimately resulting in users having less choice or paying higher prices for apps and add-ons.’

The investigation was instigated by complaints against Apple from independent developers. The claimants called Apple’s terms into issue, stating that the terms only allowed them to distribute apps on devices via the App Store. Additionally, some require the use Apple Pay to charge for add-ons or upgrades. As such, each time a user buys an app, Apple charges an additional 30% commission, which hinders profitability and legitimacy for developers.

Several developers have reported that these terms were highly unfair and break competition law. The Chief Executive of the UK Watchdog, Andrew Coscelli elaborates:

‘So, complaints that Apple is using its market position to set terms which are unfair or may restrict competition and choice – potentially causing customers to lose out when buying and using apps – warrant careful scrutiny’

Who is participating in investigatory legal action?

Aside from the CMA, groups including Epic Games and Arizona’s House of Representatives have found issue with the Apple and Google Stores.

Epic Games levied a legal battle against Apple after the Fortnite developer discovered that the App Store had taken a 30% commission from in-store purchases. The developer also cited the difficulty in launching a mobile app with submitting to the companies’ terms as grounds for their suit.

Additionally, Epic Games was banned by both the Google and Apple stores after it had bypassed their terms. Epic Games created a pathways for customers to buy their products off the app stores through cheaper cryptocurrency channels. As a result of this manoeuvre, Fortnite was taken off Google and Apple’s app stores.

In the same light, Arizona’s House of Representatives passed a law that prohibits Apple and Google from exceeding one million downloads on their app stores. The law covers users living in the state, and intends to protect the market share of independent developers and vendors.

The law is pending approval from the Senate, as well as elaboration on how developers will construct models that align with Arizona’s new requirements.

Origins of the Investigation

The CMA examination was originally prompted by an investigation into the online advertising market. During this examination of digital monopolies, the UK watch dog CMA found that companies like Google and Facebook abused anti-competition laws through their ‘strategic market status’. The CMA’s findings show that Google and Facebook combined cover two thirds of the UK’s advertising spend, implying an implicit monopoly over the digital market.

The CMA aims to deconstruct this monopoly in order to reinstate consumer control and innovation borne of market competition. It will pay particular attention to the relationship between digital advertising and news publishing, given the advent of ‘fake news’ surrounding elections and the coronavirus pandemic. The Cairncross review into the current and future status of British media argues that regulating organisational behaviour on online advertising platforms is crucial in ensuring fairness:

‘The behaviour of online platforms on whom news publishers rely is a key barrier to publishers developing sustainable business models online.’

The Result

As of yet, no decision has been made as a result of this enquiry. However, Coscelli reveals that the investigation has given light to some ‘worrying trends’ in the market:

‘Our ongoing examination into digital markets has already uncovered some worrying trends. We know that businesses, as well as consumers, may suffer real harm if anti-competitive practices by big tech go unchecked. That’s why we’re pressing on with setting up the new Digital Markets Unit and launching new investigations wherever we have grounds to do so’

The CMA’s Digital Markets Unit will address problems imposed by digital monoliths, including Facebook and Google. The group intends to further investigate possible abuse of user data, involuntary reliance on one particular news and online source, as well as the unfair domination of advertising capacities.