Indopacific
For a time, dominant platforms have managed to get away with their restrictive app store policies, but regulatory and legislative pressure is increasing thanks to vigilant government watchdogs.
Click on the blue squares to see how regulators and policymakers in India, Japan, South Korea, and Australia are standing up for consumers and holding app store gatekeepers accountable.
India
On 25 October 2022, the Competition Commission of India (“CCI”) imposed a fine of $113 million on Google for its anti-competitive practices in the Play Store. The CCI also directed Google to introduce various changes to its Play Store policies, including allowing app developers to use third-party payment processing services for in-app purchases or for purchasing apps, not restricting them from communicating with their users to promote their apps and offerings as well as ensuring complete transparency in communicating services provided to app developers and the fees charged. Google is also prohibited from leveraging to its further competitive advantage transaction / consumer data generated through the Google Play Billing System and must provide access to such data to app developers. During the implementation period, Google has paused enforcement of their Play Store billing requirement. Given that Android commands 97 percent of the smartphone market in India, the CCI’s ruling represents a huge win for the hundreds of millions of Android users in India.
In January 2022, the CCI initiated an investigation to determine whether Apple requiring iOS developers to use its in-app payment processing system is anti-competitive. The CCI says "the Commission at this stage is convinced that a prima facie case is made out against Apple which merits investigation."
South Korea
South Korea became the world’s first country to pass legislation that seeks to explicitly address the anticompetitive practices of app store gatekeepers. This law prohibits app store platforms like Apple and Google from requiring developers to use the app store’s payment processing services for in-app purchases. Apple and Google have implemented their obligations under the amended Telecommunications Business Act (“IAP Act”) that is technically compliant, but remains economically unviable, requiring app developers using alternative in-app payment solutions to pay a 26 percent commission. Apple also imposes other conditions aimed at disincentivizing app developers to take advantage of the law. In August 2022, the KCC launched a fact-finding investigation into Apple and Google. If the results of the investigation show there were violations of prohibited acts, the KCC has announced that they will take strict measures such as issuing a correction order or imposing a penalty surcharge.
Japan
The Act on Improving Transparency and Fairness of Digital Platforms, which came into effect in February 2021, stipulates that the government should secure the necessary commitments from digital platform providers and enforce relevant regulations, whereby the platform providers must take voluntary and proactive efforts toward improving the transparency and fairness of their digital platforms.
Japan’s Digital Market Competition, Cabinet Secretariat (“DMCH”) released the interim report of its competition assessment of the mobile ecosystem on 26 April 2022. The report discusses in detail a broad range of competition concerns about the mobile ecosystems, including fees charged to app developers and that many app market operators require the exclusive use of a specific in-app payment processing system.
Australia
The second Digital Platform Services Inquiry interim report of the Australian Competition & Consumer Commission (“ACCC”), published on 28 April 2021, found that Apple and Google have significant market power in the mobile app distribution market in Australia. The report suggested requiring measures to address competition concerns arising from this market power including an obligation to allow app developers provide consumers with alternative payment options. In November 2022, the ACCC released their fifth interim report, which included a series of recommendations intended to address the anticompetitive behaviors of big tech gatekeepers, including Apple and Google in respect to their app stores. Specifically, these suggestions include meaningful measures to address self-preferencing, anticompetitive tying, and unfair terms of service and exclusive in-app purchase agreements.
Indonesia
On 15 September 2022, the Indonesian competition authority (“KPPU”) launched an investigation into Google over potential unfair business practices regarding the required use of Google’s proprietary payment services on the Google Play Store. When announcing the investigation, KPPU said in a statement, “[we suspect] that Google has conducted an abuse using its dominant position, conditional sales and discriminatory practices in digital application distribution in Indonesia.” According to KPPU, Google controls 93 percent market share in the country of 270 million.
India
On 25 October 2022, the Competition Commission of India (“CCI”) imposed a fine of $113 million on Google for its anti-competitive practices in the Play Store. The CCI also directed Google to introduce various changes to its Play Store policies, including allowing app developers to use third-party payment processing services for in-app purchases or for purchasing apps, not restricting them from communicating with their users to promote their apps and offerings as well as ensuring complete transparency in communicating services provided to app developers and the fees charged. Google is also prohibited from leveraging to its further competitive advantage transaction / consumer data generated through the Google Play Billing System and must provide access to such data to app developers. During the implementation period, Google has paused enforcement of their Play Store billing requirement. Given that Android commands 97 percent of the smartphone market in India, the CCI’s ruling represents a huge win for the hundreds of millions of Android users in India.
In January 2022, the CCI initiated an investigation to determine whether Apple requiring iOS developers to use its in-app payment processing system is anti-competitive. The CCI says “the Commission at this stage is convinced that a prima facie case is made out against Apple which merits investigation.”
South Korea
South Korea became the world’s first country to pass legislation explicitly addressing the anticompetitive practices of app store gatekeepers. Their IAP law prohibits app store platforms like Apple and Google from requiring developers to use the app store’s payment processing services for in-app purchases. By allowing developers to avoid the “app tax”, which grants Apple and Google 15% to 30% commission for all purchases made, developers will be able to invest and innovate their businesses and the overall workforce.
Japan
In Japan, there have been four major antitrust investigations launched against Apple by Japan’s Fair Trade Commission (JFTC) since 2019. The two most recent in 2021 were focused on Apple’s anti-competitive practices within the App Store. A settlement with Apple was reached in September of 2021 to allow developers of “reader” apps to link to their own websites for users to manage their accounts. This allows app developers to bypass the 30% App Store fee Apple charges. Six weeks after that investigation ended another one was opened by the JFTC concerning mobile operating systems and iOS and Android’s domination of the mobile operating systems market.
Indonesia
On 15 September 2022, the Indonesian competition authority (“KPPU”) launched an investigation into Google over potential unfair business practices regarding the required use of Google’s proprietary payment services on the Google Play Store. When announcing the investigation, KPPU said in a statement, “[we suspect] that Google has conducted an abuse using its dominant position, conditional sales and discriminatory practices in digital application distribution in Indonesia.” According to KPPU, Google controls 93 percent market share in the country of 270 million.
Australia
The second Digital Platform Services Inquiry interim report of the Australian Competition & Consumer Commission (“ACCC”), published on 28 April 2021, found that Apple and Google have significant market power in the mobile app distribution market in Australia. The report suggested requiring measures to address competition concerns arising from this market power including an obligation to allow app developers provide consumers with alternative payment options. In November 2022, the ACCC released their fifth interim report, which included a series of recommendations intended to address the anticompetitive behaviors of big tech gatekeepers, including Apple and Google in respect to their app stores. Specifically, these suggestions include meaningful measures to address self-preferencing, anticompetitive tying, and unfair terms of service and exclusive in-app purchase agreements.