London, UK — Today, the Coalition for App Fairness (CAF) released the following statement in response to the Competition and Markets Authority’s provisional designation of Apple and Google’s mobile ecosystems as having Strategic Market Status.
Up to 8,000 jobs annually could be created if the UK embraced a more competitive mobile app market, according to new analysis from Keystone Strategy for Epic Games.
Google and Apple’s dominance of the UK’s mobile app market currently block other companies from creating competing app distribution channels or alternative payments platforms and makes mobile phone app developers pay commission fees of up to 30% for their digital products to be distributed through the two companies’ app stores. The analysis predicts that increased competition could add up to £9.8bn in UK developer revenues over 10 years.
“New analysis spells out the benefits of third-party app distribution for the wider economy. It shows that by thwarting innovation and competition the two companies are acting as major impediments to job creation and economic opportunity,” said Gene Burrus, Global Counsel for the CAF.
Keystone’s modelling estimates that if competing mobile app stores resulted in fees dropping to between 10–15%, similar to the more open PC games market, developers’ revenues could increase by between £491m and £687m annually. More competitive rates and enabling no-fee payment link-outs could unlock even more revenues.
This boost could see between 2,600 and 4,600 new developers enter the market and attract between £130m and £230m in Venture Capital investment over 10 years, Keystone Strategy predicts. In addition, it could create between 1,900 and 8,000 new jobs a year
The UK Competition and Markets Authority (CMA) recently proposed designating Apple and Google with Strategic Market Status (SMS) for their mobile platforms -requiring them to follow a new code of conduct designed to stimulate competition. A final decision is expected in October. A recent court ruling in Australia against Apple and Google over their anticompetitive app store practices highlights the need for the CMA to act quickly and keep in line with global standards.
“Without app store competition, Apple and Google will continue to use their control over the iOS and Android operating systems to extract onerous fees to the detriment of developers and consumers. In the EU, where the DMA has opened the market up to alternative app distribution, we’ve already seen new mobile stores emerge offering consumers better deals and developer’s new ways to reach customers.” Burrus added. “Allowing competing app stores would unleash a jobs boom and boost innovation and competition, ensuring the UK doesn’t lag behind other countries when it comes to reaping the benefits of the digital economy.”
METHODOLOGY:
- Using a partial equilibrium framework, Keystone assessed the potential economic impact on the UK of increased intra-platform competition in mobile app distribution (where multiple app stores coexist within the same operating system).
- The analysis models two scenarios: Scenario 1, where Apple allows rival app stores on iOS and Google expands access on Android, and Scenario 2, where no-fee external payment link-outs are also enabled (permitting app developers to direct users to alternative payment methods outside of an app store at no additional fee).
- Drawing on public and SensorTower data of app downloads and revenues, the analysis examines direct impact on and broader economic value to the UK economy – focusing on incentives, pricing, entry, and innovation.
- The analysis was conducted by Keystone Strategy, an economics, strategy and technology consulting firm led in the UK by Andrea Coscelli, Head of Keystone Strategy’s European practice and former CEO of the CMA.
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The Coalition for App Fairness is an independent nonprofit organization formed to protect consumer choice, foster competition, and create a level playing field for all app and game developers globally. Originally formed by Basecamp, Blix, Blockchain.com, Deezer, Epic Games, the European Publishers Council, Match Group, News Media Europe, Prepear, Proton, Skydemon, Spotify, and Life360, CAF has rapidly grown from 13 to 80 members since launching in September 2020. CAF offers membership to companies of any size — join today at appfairness.org.