How Competitive is the App Store Market?

How Competitive is the App Store Market?

Google’s former executive chairman once said that, on the Internet, “competition is just a click away.” However, according to the House of Representatives’ antitrust investigation of Big Tech, the withdrawal from Google’s app store is a bit more complicated than that. If you want to bypass that platform and load an app directly onto your phone, it requires a “complicated twenty-step process.”

Today, almost all mobile apps are downloaded through Apple’s app store on iPhones or the Google Play app store on Android phones. As a result of this duopoly, Apple and Google can charge a 30 percent commission or “app tax” for paid apps sold in their store — although antitrust investigation has created some exceptions to that rule. They also abused their gatekeeping power to ban apps like Parler.

A number of bills, such as the Open App Markets Act, now seek to solve the problems created by this duopoly. But some conservative groups in DC claim that the app store market is working well.

These groups tend to argue that the current state of the market can only be explained by market forces, consumer choice and the invisible hand. However, a perfect market like that is about as common as a perfect person who never does anything wrong.

If you want to know how free a market actually is, you need to have some domain expertise in that market. What happens when you talk to actual app developers who have that expertise? You’ll learn that those who create iPhone apps choose Apple’s app store because it’s the only choice: Apple bans both sideloading and competing app stores on iPhones.

Developers flock to Apple not because of the invisible hand, but because of Apple’s visible hand, which prohibits competition.

Google Play Store logo
An illustration photo taken in Moscow on April 21, 2022 shows a smartphone screen with the Google Play Store app logo.
Kirill KUDRYAVTSEV/AFP/Getty Images

And if Apple’s approach for iPhones can be described as aggressive, then Google’s complicated 20-step sideloading process for Android phones can be described as passive-aggressive. Google’s actions are designed to create the perception of competition, not actual competition.

Let’s say you bought a car from a Nissan dealer, and the dealer gave you two options. First, you can buy an incomplete car without a transmission. Second, you can buy a complete car, but you have to sign a contract that says you will only repair the car at Nissan dealers.

This is essentially what Google has done to phone manufacturers like Samsung and LG. However, instead of the transfer, they use an essential application called Google Play Services as leverage. According to an antitrust lawsuit filed against Google by 37 state attorneys general, the “vast majority of the top paid and unpaid Android apps” depend on features provided by Google Play Services. Even Google’s own website says, “Apps may not work if you uninstall Google Play Services.”

As the antitrust suit points out, Google offers phone makers two options. First, they can ship phones without Google Play Services. Second, they can ship phones with Google Play Services, but then they have to sign an anti-competitive contract. As part of this contract, they must also pre-install Google Play (and many of Google’s own apps), make Google Play the default app store, and not feature any other app store more prominently than Google Play.

And what if you don’t like Apple’s app store? In that case, it’s not as simple as switching app stores. To use Google’s app store, you need to buy an Android phone and then learn how to use it. The market for app stores is one with very high switching costs; it’s certainly higher than the cost of switching from Netflix to Hulu, or from YouTube to Rumble.

Conservatives often complain that government bureaucrats have little to no understanding of the people and businesses under their thumb. However, many conservatives in DC suffer from the same lack of understanding. They use all the right free market buzzwords, but they don’t understand the markets they’re talking about. And for that reason, they often oppose bills that would put meaningful checks on the Big Tech companies and their abuse of power.

When Kevin Roberts outlined a new direction for the Heritage Foundation, he emphasized: “It is the job of conservatives within the Beltway to better connect with conservatives outside the Beltway.” To do that, conservatives in DC need to understand the real experience of people outside of DC. When they talk about a market, they need to have a level of domain expertise that provides a real understanding of that market. If it When it comes to Big Tech, competition isn’t always a click away.

Mike Wacker is a software engineer and technologist who previously served as a technology fellow in Congress.

The opinions expressed in this article are the author’s own.

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