The discussion about the introduction of mandatory installation of alternative app stores and payment gateways other than Apple is spreading beyond the borders of the European Union, and Indian regulatory authorities are also considering whether to take similar actions. However, the acquisition of power by competitive forces is not the best solution.
Instead, a more sensible approach would be to recognize Apple’s App Store and Google’s Play Store as natural monopolies in their respective domains and regulate the fees, without compromising the security and integrity of these platforms. The European Union’s Digital Marketing Directive, which aims to identify gatekeepers to the digital economy and define the terms for these gatekeepers, came into effect on November 1, 2022. However, the provisions relating to this directive only became enforceable as of May 2, 2023. The process of designating gatekeepers took place on September 6, 2023, and the obligations associated with them will commence in March 2024. The awareness that the European Union provides regulators and regulated entities regarding compliance with the new regulations is noteworthy, especially in India, where there is no shortage of magical thinking about the time required to implement new regulations.
Apple and Google charge a 30% commission on paid apps, subscription apps (which drops to 15% after the first year), and digital content purchases within these apps, also known as in-app purchases. There are simplified rates for small businesses, the definition of which varies depending on the app (and region, in some cases). Samsung’s app store charges a 30% commission, while many Chinese app stores charge between 50% and 60%.
The initial justification for such high fees was that Apple and Google, as creators of app stores, invest a lot of money in developing these platforms and must continue to allocate resources to ensure their security while testing an increasing number of apps being introduced into the stores. However, app stores generate billions of dollars in revenue for Apple and Google and should be treated as separate profit centers.
Of course, there is a reason why Apple and Google charge fees to app developers for access to millions of consumers using their app stores, who represent a ready market for these developers. A similar commission is not inappropriate for Google and Apple. However, the iOS and Android app stores, owned by Apple and Google respectively, are effectively monopolies for their users. The privileges resulting from this monopoly should not be abused. How can this be ensured? One solution is to enforce competition by requiring Google and Apple to allow app installations from other sources, meaning allowing apps from outside sources to be installed on Android and iOS phones. Another solution is to limit the maximum commission they can charge.
Of course, installing apps from sources other than the primary operating system comes with the risk of malicious software being included in those apps. This risk stems from the lack of control that is exercised over apps delivered from external app stores. Therefore, Apple has announced the introduction of a special fee in Europe, charged to each user for downloading or updating apps from independent app stores, to cover the costs of verifying these apps. Of course, the European Union can limit such a fee, but Apple has strong arguments for recovering the costs associated with app verification on their devices.
Wouldn’t it be simpler if the fees charged by Google and Apple were regulated on the basis of local monopoly? An airport or a railway station constitutes a natural monopoly in a specific geographical area. On the other hand, power or telephone cables being brought into a house do not constitute a monopoly, but duplicating them for another provider would be a waste of resources. Limiting rates or introducing open access is a reasonable solution in such cases.
An important argument in favor of regulating the fees charged by Google and Apple is the potential emergence of new forms of malicious software as a result of the growing role of artificial intelligence as a major source of software creation.
Big companies like Google and Apple are able to allocate the necessary resources to build secure platforms, but at the same time, there is a need to strike a balance between their monopolistic power and the need for regulation. Well-thought-out regulations can disrupt this balance and create more problems than they aim to solve. It is important to avoid extremes and find the right balance between monopolies and appropriate regulations.
FAQ section based on the main topics and information presented in the article:
1. What are Apple’s App Store and Google’s Play Store?
Apple’s App Store and Google’s Play Store are mobile app stores where users can download apps onto their devices.
2. Why are Apple’s App Store and Google’s Play Store referred to as natural monopolies?
Apple’s App Store and Google’s Play Store are considered natural monopolies because they are the main app stores on their platforms, iOS and Android, and have significant market shares.
3. What commissions do Apple and Google charge app developers?
Apple and Google charge a 30% commission on paid apps, subscription apps (which drops to 15% after the first year), and in-app purchases of digital content within these apps.
4. What are the proposed regulations for the commissions charged by Apple and Google?
One solution is to enforce competition by allowing app installations from sources other than Apple’s and Google’s app stores. Another solution is to limit the maximum commission they can charge.
5. Why is there a risk of malicious software in apps outside of Apple’s App Store and Google’s Play Store?
This risk stems from the lack of control exercised over apps delivered from external app stores. The security of apps relies on verification and control conducted by Apple and Google, which can be limited in the case of apps outside their stores.
6. What are the arguments in favor of regulating the fees charged by Apple and Google?
Arguments include the growing role of artificial intelligence as a source of software creation and the need to strike a balance between the monopolistic power of large companies and the need for regulation.
7. What is the role of the European Union in regulating the fees charged by Apple and Google?
The European Union has introduced the Digital Marketing Directive, which involves identifying gatekeepers to the digital economy and defining the terms for these gatekeepers. The provisions of this directive became enforceable in May 2023.
Suggested related links:
– Apple
– Google
The source of the article is from the blog cheap-sound.com