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App Store Antitrust Hearings Begin: What This Could Mean for App Developers

July 30th, 2020

App Store Antitrust Hearings Begin: What This Could Mean for App Developers
David Quinn

by David Quinn

VP of Strategy & Partnerships at Gummicube, Inc.

The App Store and Play Store have faced accusations of anti-competitive behavior, and now their respective companies are defending themselves before the US House of Representatives. The CEOs of Apple, Google, Amazon and Facebook are testifying before the Antitrust Subcommittee, and the results of this case could impact the app stores.

App Store Antitrust

Are tech companies using their storefronts, such as the App Store and Google Play Store, to unfairly edge out competitors?

That is the big question during the antitrust hearings. Chairman David Cicilline of the House Judiciary Antitrust, Commercial and Administrative Law Subcommittee stated:

“Our two objectives have been to document competition problems in the digital economy, and to evaluate whether the current antitrust framework is able to properly address them. … As gatekeepers of the digital economy, these platforms enjoy the power to pick winners and losers, shake down small businesses and enrich themselves while choking off competitors.”

Cicilline brought up common patterns for the companies in question:

  • Control over or the ability to bottleneck a key channel of distribution, such as an app store
  • Using data and surveillance to buy, copy or cut off potential competition
  • Preferencing their own products over competitors
  • Predatory pricing schemes

The tech CEOs have released their statements, each one stating that they face tremendous competition and provide an important value to consumers.

App Store and Antitrust

Key to app development is Apple’s App Store. App developers such as Spotify have argued against the 15-30% App Store Tax, although Apple stated that it’s in line with competitors’ rates.

According to Apple CEO Tim Cook’s statements:

“Apple’s commissions are comparable to or lower than commissions charged by the majority of our competitors and they are vastly lower than the 50 to 70% that software developers paid to distribute their work before we launched the App Store.”

Cook went on to describe how the App Store provides a secure way for developers to distribute apps around the world and for users to discover apps.

App developers have also argued that Apple doesn’t subject its own apps to the same rules as third party apps. This would provide Apple with an unfair advantage over its competition. Cook stated how there are over 1.7 million apps available on the App Store, only 60 of which are from Apple.

“Clearly, if Apple is a gatekeeper, what we have done is open the gate wider,” Cook stated. “We want to get every app we can on the store, not keep them off.”

App Store Optimization

Given how much of the hearing is focused on the App Store, the results could impact how the storefront operates.

One accusation raised against Apple is the use of a “copy-acquire-kill” strategy, wherein a company bottlenecks competitors in order to boost the success of their own version of an app, then acquire and cancel the competition. We saw concerns of this when Apple added new restrictions to parental control apps while maintaining its own Screen Time feature.

The end result of the antitrust hearing and investigation can impact how Apple handles paid and freemium apps, as well as apps that may compete with its own.

Developers should be aware of how their apps may be in competition with Apple’s apps and consider their App Store Optimization. Apps that offer screen time control features may want to adjust their optimization to focus on targeting different but relevant terms to avoid being seen as a competitor to Screen Time.

On the other hand, if it is determined that Apple is giving itself an edge over competitors and not following its own guidelines, then it may present new opportunities to target “screen time” keywords.

What About the Play Store?

Although the Google-focused side of the hearing is more focused on search engines and advertisements, rulings towards the App Store could also influence the Google Play Store.

Google also charges developers a similar tax on sales and in-app purchases. Although developers can potentially circumvent this by releasing their apps outside of the Play Store, as Epic Games attempted with Fortnite, that is typically not as profitable as releasing in the Play Store is.

Rulings made towards Google’s advertising practices could have an impact on Google Ads, which are important tools for app marketing. Developers running Google Ads campaigns should keep a close eye on any changes that come about as a result of these hearings and watch their campaigns closely.

Overall

The antitrust hearings have only recently begun, so the results and impact have yet to be seen. Whichever the result may be, this can have a big impact on the App Store, Play Store and marketing ecosystems, so app developers should keep a close eye on the developments.

Want to learn more about App Store Optimization? Contact Gummicube and we’ll help get your strategy started.

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