ACCC wants users to be able to replace iOS and Android default apps

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Australia’s competition watchdog wants to see Apple and Google provide for greater choice of default apps for consumers.

“There is a need for consumers to have more choice through an ability to change any preinstalled default app on their device that is not a core phone feature,” the Australian Competition and Consumer Commission (ACCC) said. “This would provide consumers with more control to choose the app that best meets their needs, and promote more robust competition in downstream markets for apps.”

The remarks were made in its report into app marketplaces, which echoed much of what it has said before: That the Apple App Store and the Google Play Store dominate mobile app distribution.

The report [PDF] follows a probe into the competition and consumer issues associated with the distribution of mobile apps to users of smartphones and other mobile devices. The ACCC announced the investigation was underway in September, as part of its greater Digital Platform Services Inquiry, which was responsible for the News Media and Digital Platforms Mandatory Bargaining Code.

The 165-page report breaks down the market power of each Apple and Google in the app marketplace; the terms of access to app marketplaces for app developers, including payment arrangements; the effectiveness of self-regulation, including arrangements to deal with harmful apps and consumer complaints; and concerns with alleged self-preferencing and the use of data.

“These issues affect competition with potentially significant impacts for both app developers and consumers,” the report said.

The report contains five further measures the ACCC believes can address the issues it outlines. These include addressing payment option limitations; increasing transparency and addressing risk of self-preferencing; and limiting the access to data by third-parties.

Globally, when excluding China, the Android OS and Apple’s iOS, account for close to 100% of the market for mobile operating systems; Google has approximately 73% of this market and Apple has around 27%.

In Australia, the split is close to 50/50.

“Apple and Google’s dominance in mobile OS, combined with the control exerted over the app marketplaces permitted into their mobile ecosystems, means that the App Store and the Play Store control the key gateways through which app developers can access consumers on mobile devices,” the report says.

In assessing the competitive implications of the practices and policies at both tech giants — such as terms and conditions, alleged self-preferencing, data generated from third-party apps, and in-app payments — the ACCC said it is important to recognise that competition occurs, or can occur, at two levels.

“At one level there is competition between mobile ecosystems. At another level there is competition within Apple and Google’s mobile ecosystems,” it wrote.

The ACCC declared both app marketplaces possess unfair terms including restrictions on the ability of app developers to access the users of their apps; a lack of transparency in the policies and processes governing Apple and Google’s app review and approval process; and inadequate avenues to resolve disputes.

Many months back, the ACCC toyed with the idea of stepping in to develop a set of minimum internal dispute resolution standards to apply to digital platforms, covering among other things, the visibility, accessibility, responsiveness, objectivity, confidentiality, and collection of information of digital platforms’ internal dispute resolution processes. Similarly, with the introduction of external oversight of the digital platforms to resolve complaints between platforms and businesses and platforms and consumers via an ombudsman scheme.

“These recommendations may assist in the context of concerns raised in relation to app marketplaces, as they could help ensure Apple and Google address concerns raised by third-party app developers about the app review process,” the report said.

It also considers that greater transparency and more information on the operation of app discoverability mechanisms, as well as a level playing field for apps to receive consumer ratings and reviews, would go some way to addressing app developer concerns with self-preferencing.

Where data practices are concerned, similar to the issue of self-preferencing, the ACCC considers that Apple and Google may have the ability and the incentive to use information to assist strategic or commercial decisions about first-party app development.

Currently, app developers cannot publish and distribute an app on an Apple mobile device without using the Apple App Store. Developers who offer “in-app” features, add-ons, or upgrades are required to use Apple’s payment system, rather than an alternative system.

Apple also charges a commission of up to 30% — or 15% in the case of subscription services — to developers on the value of these transactions or any time a consumer buys their app. So does Google.

“App developers should not be restricted from providing users with information about alternative payment options. This would provide greater choice and potentially lower prices to consumers and allow app developers greater scope to innovate,” the ACCC summarised.

Elsewhere in the report, the ACCC said it remains concerned with the tracking of consumers through apps; it also considers that consumers must have adequate access to avenues for redress from app marketplaces for losses caused by malicious apps, low quality apps, unauthorised billing issues, and where they are otherwise entitled to a remedy under the Australian Consumer Law.

ACCC chair Rod Sims said the watchdog will also take into account “significant proposals and law changes” in other countries that have identified similar concerns, such as the United Kingdom’s Apple App Store investigation, when it moves to act on the findings of its app marketplace report.

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