In a world where ‘an Apple a day’ doesn’t keep the regulators away, Epic Games has found itself in a tug-of-war with tech giants. First, they faced off against Apple in a battle royale over App Store policies, only to be ‘fortified’ in their fight against Google’s Play Store. Despite their loss to Apple, Epic’s recent victory against Google highlights a growing concern: Apple’s App Store may be wielding an even tighter grip on its digital empire. As regulators increasingly zero in on Big Tech, landmark cases like Epic v. Google mark a shift towards greater accountability in the tech arena. Let’s drop into the storm and navigate the latest legal actions reshaping the landscape of big tech. As regulators begin to tighten the reins on Big Tech, landmark legal battles like Epic v. Google have come to symbolize a turning point in how technology giants are held accountable for their marketplace practices. Here is a rundown of just the most recent activity around public legal action on big tech.

1. Alphabet (Google):
   • Faced a record €150 million fine by the EU for obstructing users from refusing cookie tracking, indicating a stricter stance on data privacy and user consent.
   • Under investigation in Germany for potentially abusive business practices and anti-competitive restrictions on Google Maps, showcasing the broadening scope of antitrust inquiries.
   • In litigation with the U.S. Department of Justice over alleged monopoly abuse in digital advertising, a key revenue stream for Google.
2. Amazon:
   • Accused by the UK’s Competition and Markets Authority of using secretive algorithms to abuse its market dominance, with a potential fine of £1 billion.
   • Under investigation by the U.S. Securities and Exchanges Commission for its use of third-party data, highlighting concerns over unfair competitive advantages.
3. Apple:
   • Ordered by the Netherlands Competition Authority to change its App Store terms, exemplifying regulatory action against restrictive digital marketplace practices.
   • Undergoing multiple investigations by the European Commission for restricting access to NFC chip technology and potentially monopolistic behavior in mobile app stores.
4. Meta (Facebook):
   • Facing litigation from the U.S. Federal Trade Commission over a potentially anti-competitive acquisition, reflecting concerns about market consolidation in emerging tech sectors.
5. Microsoft:
   • Scrutinized by the European Commission and the U.S. Federal Trade Commission for its practices and a significant acquisition, respectively, underlining the increasing vigilance over tech mergers and business conduct.

These cases collectively underscore a significant shift in the regulatory environment, where authorities are not only more actively investigating but also imposing substantial penalties and directives on tech giants. The recent verdict against Google’s Play Store policies marks a significant stride in this direction, challenging long-standing operational norms within the tech industry.

With Google now facing considerable legal consequences for its alleged anti-competitive behavior in app distribution and in-app payment systems on Android, the spotlight might again inevitably turn to Apple. Despite similar practices in its App Store, Apple has managed to navigate the legal landscape with relatively less upheaval. This article seeks to unravel why, in an era where regulators are increasingly scrutinizing Big Tech, Apple’s App Store should be subjected to the same critical examination that has recently upended Google’s Play Store operations.

Apple’s Fortified Walls: Security or Monopoly Shield?

In the legal battles of Epic v. Apple and Epic v. Google, the central issue revolves around the monopoly argument, but the outcomes and scrutiny faced by these two tech giants diverge significantly, largely due to the inherent differences in their operating systems’ openness.

1. Epic v. Apple – The Closed Ecosystem Advantage:
   • Control Over App Distribution: Apple’s control over app distribution on iOS devices is near absolute. The iOS ecosystem does not allow for sideloading or third-party app stores. This closed system approach essentially hands Apple a monopoly over app distribution on its devices.
   • Difficulty in Proving Malfeasance: Apple’s closed ecosystem presents unique challenges in proving anticompetitive behavior. The lack of external benchmarks or comparisons within the iOS ecosystem makes it harder to demonstrate how Apple’s policies harm competition or inflate prices. This self-contained environment provides Apple with a shield against certain types of antitrust scrutiny, as the company can argue that its practices are integral to maintaining the security and integrity of its ecosystem.
   • Security and Quality Control Argument: Apple consistently cites security and quality control as reasons for its closed ecosystem, which resonates with a significant portion of its user base and regulators. This argument complicates the monopoly debate, as Apple positions its control as a necessary measure to protect consumers, rather than an effort to stifle competition.
2. Epic v. Google – The Openness Paradox:
   • Perceived Openness: Google’s Android platform is perceived as more open, allowing for sideloading apps and supporting third-party app stores. However, this openness became Google’s Achilles’ heel in its legal battle with Epic, as it was easier to demonstrate how Google’s specific actions, despite the platform’s inherent openness, could be seen as anti-competitive.
   • Google’s Business Deals and Practices: The openness of Android meant that Google’s business deals, especially those attempting to limit the effectiveness of alternative app stores or payment systems, were more visible and able to scrutinize. This visibility provided concrete examples of how Google might be manipulating its ostensibly open platform to its advantage, a factor that played a significant role in the legal outcomes.

Apple’s ability to avoid the level of scrutiny Google faced in its antitrust battle with Epic can be partly attributed to the inherent closed nature of the iOS ecosystem.

This closed system makes it more challenging to demonstrate clear anticompetitive behavior, as Apple controls all aspects of the app distribution process and can effectively mask its practices behind the guise of security and quality control. Conversely, Google’s more open system exposed its practices to clearer scrutiny, making it easier for Epic and regulators to pinpoint specific anti-competitive actions.

The Apple Tax: A Bite Out of Innovation and Fair Pricing

Apple’s App Store policies, particularly its mandatory in-app purchase system and the associated 30% commission, have significant financial implications for developers. This section of the article will expand on how these policies not only impact developers’ revenue but also reflect a pattern of favoritism and inconsistency similar to the practices observed in Google’s App Store.

1. High Commission Rates:
   • Impact on Smaller Developers: The 30% commission, often referred to as the “Apple Tax,” can be particularly burdensome for smaller developers. These developers may have thinner profit margins, making the high commission rate a significant barrier to profitability and growth.
   • Comparison to More Flexible Models: Other platforms, such as Google’s Play Store or independent app stores, often offer more flexible and sometimes lower commission structures. This comparison highlights the restrictive nature of Apple’s policies and how they can disadvantage developers who are bound by the iOS ecosystem.
2. Favoritism and Inconsistency:
   • Selective Enforcement and Deals: Similar to Google’s practices, Apple has been known to pick and favor certain companies. For instance, Apple’s “secretive” deal with Amazon allowed the latter to use its own payment system for Prime Video purchases, bypassing the standard 30% commission. This selective enforcement raises questions about the fairness and consistency of Apple’s policies.
   • Impact on the Competitive Landscape: Such preferential treatments can distort the competitive landscape, where larger companies with negotiating power get better deals, leaving smaller developers at a disadvantage. This inequity can stifle innovation and diversity in the app market.
3. Indirect Impact on Consumer Prices:
   • Passing Costs to Consumers: High commission rates can lead developers to increase the prices of their products and services to maintain profitability. This cost is often passed on to consumers, affecting the overall affordability of apps and in-app purchases.
   • Limiting Free and Lower-Cost Options: The financial strain of Apple’s commission may also limit the availability of free or lower-cost options in the App Store, as developers might find it unsustainable to offer such options under the current fee structure.

Apple’s rigid in-app purchase system and the accompanying high commission rates have far-reaching effects on the digital ecosystem. They not only pose financial challenges for developers but also contribute to a less equitable and competitive app market. The favoritism and inconsistency in enforcing these policies further exacerbate these issues, mirroring some of the criticisms levied against Google’s Play Store practices.

Suggested Intervention: Balancing Fair Play and Revenue in Tech Giants’ App Stores

My proposed intervention to resolve the competitive imbalance in Apple’s and Google’s app stores involves a significant policy change: either these companies can continue to charge a 30% commission on transactions within their app stores, or they can offer their own competitive apps (like Apple Music or Google Play Music), but not both. This suggestion aims to create a more level playing field for third-party app developers and mitigate the inherent conflict of interest when platform owners also compete within their platforms. I would also state that the commission rate needs to be constant for all, allowing potential competitors a fair playing field.

Rationalizing the Idea

The idea of imposing a choice on companies like Apple and Google, to either retain their 30% commission or divest from offering competitive apps, is grounded in several key arguments and their rationale.

Firstly, the current status of these companies functioning both as platform providers and competitors creates a conflict of interest. This dual role might incentivize them to favor their products over third-party options, disrupting fair competition. By restricting them from offering competitive apps if they opt to keep the 30% commission, it ensures a level playing field for third-party developers, eliminating the bias that platform owners might have towards their products. In terms of revenue model justification, if Apple or Google chooses to maintain the 30% commission, this should reflect their role as pure platform providers. They should focus on maintaining and improving the platform, rather than competing against other app developers. This approach would make the commission seem more like a fee for platform services such as hosting, security, and transaction processing, rather than a tool to suppress competition. The impact on innovation and consumer choice is another critical aspect. Removing first-party competition from these platforms could lead to increased innovation among third-party apps, as developers would be more motivated to invest and improve their offerings, knowing they are competing fairly. Consequently, this would lead to a more diverse array of apps and services for consumers, without any single company having an undue advantage or influence over the app ecosystem.

From a precedent and feasibility standpoint, similar interventions have been considered or implemented in other industries to curb monopolistic practices and enhance competition and consumer choice. Both Apple and Google, with their extensive resources and capabilities, can adapt to this new model by either adjusting their commission structures or spinning off their competing services. Lastly, potential challenges such as the economic impact on these tech giants and the need for robust regulatory enforcement must be addressed. While this model might impact Apple and Google’s revenue streams, it could be counterbalanced by an increase in third-party transactions on a more open platform. Implementing this change would require effective regulatory mechanisms to ensure compliance and prevent indirect forms of competition or influence.

Main Arguments	Rationale
Addressing the Conflict of Interest	Platform vs. Competitor: Apple and Google function as both platform providers and competitors, creating a conflict of interest. This role could lead them to favor their products, disrupting fair competition.
	Fair Competition: By restricting these companies from offering competitive apps alongside retaining a 30% commission, it ensures third-party developers are not disadvantaged by platform owners’ bias.
Revenue Model Justification	Economic Fairness: Opting to retain the 30% commission should reflect a role as pure platform providers, focusing on platform maintenance and improvement without directly competing against other app developers.
	Value for Service: The commission would be justified as a fee for platform services (hosting, security, transaction processing), not a means to suppress competition. This might encourage a new platform that competes with a better commission or better services.
Impact on Innovation and Consumer Choice	Encouraging Diversity: Removing first-party competition could lead to increased innovation among third-party apps, encouraging developers to invest in and improve their offerings.
	Enhanced Consumer Choice: This change could lead to a broader variety of apps and services for consumers, as no single company would have undue advantage in the app ecosystem.
Precedent and Feasibility	Regulatory Influence: Similar interventions in other industries have aimed to curb monopolistic practices and enhance competition and consumer choice.
	Adaptability: Apple and Google have the resources to adapt to this model, either by adjusting commission structures or by spinning off their competing services.
Potential Challenges and Solutions	Economic Impact on Tech Giants: The model could impact revenue streams but may be offset by increased third-party transactions on a more open platform.
	Regulatory Enforcement: Effective regulatory mechanisms are needed to ensure compliance and prevent indirect forms of competition or influence.

The proposed intervention seeks to strike a balance between allowing tech giants to profit from their platforms and ensuring fair competition within those platforms. By choosing between high commission fees and direct participation in the app market, companies like Apple and Google can demonstrate their commitment to an equitable digital ecosystem, fostering innovation and expanding consumer choices.

Extension of Proposed Intervention to Amazon: Ensuring Fair Competition

In light of Amazon’s practices involving its Amazon Basics line, it might be good to look into extending my proposed intervention, originally aimed at Apple and Google, to Amazon as well. This need is highlighted by cases such as Peak Design, where Amazon closely mimicked the design of Peak Design’s popular Everyday Sling bag with a similar, cheaper product under its Amazon Basics brand. Such actions raise concerns about Amazon’s dual role as a marketplace operator and a direct competitor on its platform.

The case of Peak Design versus Amazon’s similar product illustrates a significant conflict of interest and potential intellectual property issues. Amazon’s unique position enables it to use extensive data from its platform to create products that directly compete with successful third-party items, often underpricing them. This practice not only risks intellectual property infringement but also stifles innovation and limits consumer choice by discouraging third-party sellers. To address this, Amazon should be presented with a choice similar to that proposed for Apple and Google: either continue to levy fees on third-party sellers without offering competing products, or divest from its in-house brands that directly compete within its marketplace. This approach aims to create a more equitable online retail environment, where third-party sellers do not have to contend with their platform provider as a direct competitor. Implementing such a policy would align with the growing regulatory focus on ensuring fair competition in digital marketplaces.

Harmonizing Standards: A New Era for App Stores

As we navigate the aftermath of the Epic v. Google verdict, and potentially its appeal, it becomes increasingly clear that the need for regulatory interventions in the digital marketplace is not just a possibility but a necessity. While the suggested intervention of separating platform ownership from competing applications may not be currently under consideration, the underlying principles of fairness and competition it espouses are crucial. In any forthcoming regulations or changes post-verdict, it’s imperative that the same standards applied to Google are also applied to Apple. This ensures a level playing field, where neither company gains an undue advantage due to its operational model.

Possible interventions from the Epic v. Google verdict, subject to appeal outcomes, could include more transparent and equitable revenue-sharing models, restrictions on using platform data to compete with third-party developers, or even mandates for interoperability and openness in app distribution and payment systems. These measures could help balance the scales between these tech giants and the smaller developers who rely on their platforms.

In addition to legal compliance, the goal here is to nurture an ecosystem that fosters innovation, fairness, and consumer choice. By ensuring that Apple is held to the same standards as Google, regulators can help maintain the integrity of the app market and protect the interests of both developers and consumers. The Epic v. Google case may just be the catalyst needed to bring about significant, positive changes in how app marketplaces operate, setting a precedent that benefits the entire digital landscape.

Eric Hawkinson
Learning Futurist

Eric is a learning futurist, tinkering with and designing technologies that may better inform the future of teaching and learning.  Eric’s projects have included augmented tourism rallies, AR community art exhibitions, mixed reality escape rooms, and other experiments in immersive technology.

More at: https://erichawkinson.com