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benefits for the app store ecosystem
The EU Digital Markets Act (“DMA”) would effectively address the concerns of app developers regarding anti-competitive practices of app store gatekeepers (and related operating systems), resulting in increased competition, innovation, and more choice for European consumers.
Practice that raises concerns for app developers:
Anti-Steering
Gatekeeper app store operators place limits to the ability of certain app developers to communicate freely with their users, including to promote offers to them or to, more generally, inform them about the various (and often cheaper) purchasing possibilities that are available. Due to this, users suffer (financial) harm as they cannot enjoy the better terms that would be offered by app developers.
How the DMA can address these concerning practices:
Article 5(c) of the DMA
Will now allow app developers to communicate with and promote offers to their end users. This will bring consumer benefits: as consumers will be informed about their options, consumer choice will be enhanced – and consumers may also enjoy financial benefits in the form of lower prices for content, subscriptions, features or other items.
Practice that raises concerns for app developers:
IAP Tying
The gatekeeper app store operators make the use of their own in-app payment systems mandatory for certain app developers. This deprives both the app developer and the consumer of a free choice and has detrimental effects not only on app developers and consumers, but also on competition and innovation more broadly.
How the DMA can address these concerning practices:
Article 5(e) of the DMA
Article 5(e) of the DMA will address this unfair and harmful practice, by prohibiting gatekeepers from mandating the use or offering of their in-app payment system. The benefits that will stem from this prohibition are numerous.
First, app developers and consumers will have a choice, being able to opt for the in-app payment system that better fits their needs and preferences, instead of being forced to use the one-size-fits-all in-app payment system of the app store operator.
Second, app developers will not be disintermediated from their users (a consequence of the use of the in-app payment system of the app store operator), instead having a direct relationship with them. This has benefits both for app developers and their users. App developers will have access to valuable user data (e.g., transaction and other customer data) that they need to operate their business effectively and improve their services. They will also have the ability and incentives to invest in the customer services they offer, as this can be a competitive advantage and a differentiation factor for them vis-à-vis developers offering similar services. Users will benefit from streamlined customer services, as frictions introduced by the confiscation of customer relationship by the dominant app store operators will not arise with app developers being in charge of handling refunds, subscription cancellations and other customer service matters.
Third, competition among in-app payment system providers will be increased and so will innovation, as providers of payment solutions will have the incentive to invest in their in-app payment systems, developing innovative features tailored to the app environment.
Practice that raises concerns for app developers:
Sherlocking
Gatekeepers offering core platform services (e.g., app stores) but also ancillary services (e.g., in-app payment systems) obtain troves of data provided by or generated through the activity of their business users and the end users of these business users. They thus get unparalleled market intelligence and a strong competitive advantage, which they can use to swiftly launch products or services that compete with the (most successful) products or services offered by their business users.
How the DMA can address these concerning practices:
Article 6(1)(a) of the DMA
Article 6(1)(a) of the DMA – which prohibits gatekeepers from using, in competition with business users, data generated or providers by these business users in the context of their use of the relevant core platform services – will contribute to a fair competitive environment for app developers and act as a driver of innovation. App developers will have incentives to invest, innovate and grow, as they will no longer operate in fear that, if successful, their apps or features will be copied by gatekeepers, rendering their efforts and investments futile. In turn, consumers will benefit from access to a variety of features and services offered by app developers.
Practice that raises concerns for app developers:
Networking Effect
Gatekeepers often refuse to share with their business users data provided by or generated through the use of their core platform services (e.g., the app store) and/or ancillary services (e.g., their in-app payment system) by these business users and the end users of these business users, operating as black boxes. This harms business users’ ability to compete effectively and innovate.
How the DMA can address these concerning practices:
Article 6(1)(i) of the DMA
Article 6(1)(i) of the DMA will allow app developers to obtain access to valuable data that they need to, e.g., operate their services efficiently, improve their services, personalize their offering and keep their platforms safe. This will not only be good for app developers but will also clearly benefit consumers using these services.
Practice that raises concerns for app developers:
Combined Personal Data
Gatekeepers are in the position to combine and cross-use personal data sourced from a core platform service with personal data sourced from other services they offer or third-party services. Such practices further strengthen their position to the detriment of competition and perpetuate the data-driven advantages they enjoy. In many cases, data combination is done without the end user having a real choice.
How the DMA can address these concerning practices:
Article 5(a) of the DMA
Article 5(a) of the DMA aims to put a limit to the data combination practices of gatekeepers. This obligation is a positive step towards giving consumers a say over the use of their data and placing limits to the data-driven advantages of gatekeepers to the benefit of app developers and competition. In order tomake a difference in practice, it is necessary that this provision leaves no leeway to gatekeepers to interpret it in a manner that would fall below the standards laid out in the General Data Protection Regulation.
Practice that raises concerns for app developers:
Sideloading
Gatekeepers may prohibit third-party app stores to run on their operating system. They may also prohibit the direct downloads of apps from app developers’ websites or make such direct downloads more difficult and fraught with friction. These practices restrict competition and consumer choice and entrench gatekeepers’ position in app distribution.
How the DMA can address these concerning practices:
Article 6(1)(c) of the DMA
Article 6(1)(c) of the DMA will open up app distribution, by requiring gatekeepers to allow and technically enable the installation and use of third-party apps or app stores through channels other than the gatekeepers’ app store. This will increase consumer choice, as users will be able to obtain their apps from the channel of their preference. It will also allow for the distribution of apps that may now be restricted by app stores, increasing the availability of apps to the benefit of consumers. Facing competition by alternative app distribution channels may also limit the ability of the leading app store providers to impose unfair and abusive terms on app developers knowing that the latter have no choice but to accept them.
Practice that raises concerns for app developers:
Default Settings
Article 6(1)(b) of the DMA will enable consumers to easily un-install any apps, including those of the gatekeeper that come pre-installed on the operating system. It will also require gatekeepers to allow and enable users to change the default settings that direct or steer them to the services provided by the gatekeeper. Although the DMA does not go as far as preventing the pre-installation of the gatekeepers’ own apps and requiring them to prompt end users to change the default settings under all circumstances, this provision will be a positive step towards giving more power to consumers and a chance to app developers offering apps that compete with those offered by the gatekeeper to compete in fairer terms.
How the DMA can address these concerning practices:
Article 5(a) of the DMA
Article 5(a) of the DMA aims to put a limit to the data combination practices of gatekeepers. This obligation is a positive step towards giving consumers a say over the use of their data and placing limits to the data-driven advantages of gatekeepers to the benefit of app developers and competition. In order tomake a difference in practice, it is necessary that this provision leaves no leeway to gatekeepers to interpret it in a manner that would fall below the standards laid out in the General Data Protection Regulation.
Practice that raises concerns for app developers:
Preferential Ranking
Gatekeepers are in the position to apply preferential treatment in ranking on their platforms (e.g., the app store search results) to the benefit of their own products or services. They may also generally apply conditions in the ranking that are unfair and/or discriminatory. This has detrimental effects for business users, impacting competition and ultimately consumers.
How the DMA can address these concerning practices:
Article 6(1)(d) of the DMA
Article 6(1)(d) of the DMA will ensure that ranking is more accurate, fair and transparent, which will bring benefits both for app developers and consumers. App developers will not be disadvantaged simply because gatekeepers wish to unfairly promote their own apps, and consumers will be presented with results in the order that better corresponds to their queries.
Practice that raises concerns for app developers:
Limit Access
Gatekeepers may limit access of third parties to and interoperability with software and/or hardware features that are available to them. This places third parties at a disadvantage, as they may lack (effective) access to technology or features that are necessary for their products or services to function properly or for them to develop innovative features.
How the DMA can address these concerning practices:
Article 6(1)(f) of the DMA
Article 6(1)(f) of the DMA will address limitations to access to hardware and software features controlled via the operating system of a gatekeeper. This will bring clear competition and consumer benefits: businesses will be able to develop services that make use of features that are available to the gatekeeper, thus being in the position to effectively compete with them. Consumers will also gain, as they will have access to alternative services and will be able to choose the one that works for them.
Practice that raises concerns for app developers:
Controlled Access Marketplace
Gatekeeper app store operators control access to their app marketplaces, meaning that they can dictate the rules of the game. Their indispensable role as gateways between app developers and end users allows them to impose on app developers’ rules that are abusive and unfair, knowing that they have no other option but to accept them – or else they will lose access to their user base. Rules also often discriminate between different categories of app developers. It harms (certain) app developers and their customers, while further strengthening and entrenching the position of gatekeeper platforms.
How the DMA can address these concerning practices:
Article 6(1)(k) of the DMA
Article 6(1)(k) of the DMA will put an end to the ability of the leading app store operators to impose conditions of access to their app stores that are unfair, unreasonable and discriminatory. This provision will contribute towards levelling the playing field for app developers, allowing them to compete on the merits, without being at a disadvantage because of unfair rules imposed on them. This provision will not only reinforce the benefits brought by other provisions of the DMA (e.g., the prohibition of the mandatory use of the in-app payment system of the app store provider), but will also prevent other unfair practices (e.g., the high commissions often charged). This will benefit both app developers and consumers.
Do you agree? Join us.
The Coalition for App Fairness was created by industry leading companies who want to see freedom of choice for consumers and a level playing field for businesses. This is an open call to all developers, big and small, to join us – and together we will fight back against the monopolist control of the app ecosystem by Apple.