Apple and Google’s app stores wield ‘gatekeeper’ power and should be reined in, Commerce Department says

CNN

By Brian Fung, CNN

The Biden administration on Wednesday took its biggest swipe yet at app stores run by Apple and Google, with a new report accusing the two tech giants of exercising “gatekeeper” power that has led to “suboptimal” levels of competition in digital markets.

The report published by the Commerce Department finds that Apple and Google “play a significant gatekeeping role by controlling (and restricting) how apps are distributed,” and that the various fees and rules they impose on app developers has created an uneven playing field.

“All of these factors translate to potential losses for consumers: prices that are inflated due to the fees collected by gatekeepers, innovation that is hampered by policy decisions to limit access to smartphone capabilities, and the loss of choice of apps that are not featured or even accessible for smartphone users,” the report said.

The 48-page report throws the White House’s weight behind mounting public criticism of dominant app stores, which in recent years has led to multiple private lawsuits against Apple and Google as well as investigations by antitrust regulators in Europe and reports of a probe by the Justice Department.

In a statement, Apple said its app store has benefited developers and supports hundreds of thousands of jobs. In the past, Apple has argued that its control over iOS app distribution helps promote users’ privacy and security.

“We respectfully disagree with a number of conclusions reached in the report, which ignore the investments we make in innovation, privacy and security,” an Apple spokesperson said, “all of which contribute to why users love iPhone and create a level playing field for small developers to compete on a safe and trusted platform.”

Google has said its Android operating system, unlike Apple, allows for competing app stores.

“We disagree with how this report characterizes Android, which enables more choice and competition than any other mobile operating system,” a Google spokesperson said. “[The report] recognizes the importance of interoperability, multiple app stores and sideloading, which Android’s open system already supports — all while ensuring privacy and security.”

Wednesday’s report, published by a Commerce Department office charged with advising the president on technology issues, does not launch a regulatory process. Instead, it provides policy recommendations, such as limits on the apps Apple and Google can pre-install or set as defaults on their respective operating systems, or giving users the right to install apps from any source.

The report also called for boosting budgets for US antitrust enforcers; a ban on some app store restrictions surrounding in-app payments; and a federal privacy law establishing clear standards for data privacy.

Many of the report’s recommendations echo provisions in federal legislation that received bipartisan support last Congress, but that failed to become law.

The findings had been informed by public comments submitted to the Department in the months leading up to the report.

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