Reining In Giants

Australian regulators look to contain Google and Apple

In 2020, the Australian government directed the Australian Competition and Consumer Commission (ACCC) to conduct an inquiry into markets supplied by digital platform services, including search engine, social media, private messaging, combining digital content, media referral and online marketplace services. The inquiry also looked into digital advertising services by providers of digital platforms, analysing also the data practices of these providers as well as those of data brokers.

Last week, the ACCC released its second interim report with results of its inquiry, having released its first set of findings after the inquiry began in 2020. The competition watchdog is expected to come up with interim reports every six months until the inquiry ends, with a final report to be provided to the Treasurer by March 2025.

Its latest report provides in-depth consideration of competition and consumer issues associated with the distribution of mobile apps to users of smartphones and other mobile devices. It specifically focusses on the two leading app marketplaces used in Australia, the Apple App Store and the Google Play Store.

The ACCC has put forward a series of potential measures in response to its findings, proposing that:

• users be able to rate and review all apps
• users be given the ability to change any pre-installed default app on their device
• app developers be allowed to provide consumers with information about alternative payment options
• information collected by Apple and Google in their capacity as operators of app marketplaces be ring-fenced from their other operations.

The regulator has warned Apple and Google that although they have lots of time to address the concerns it identified on their own, the regulator will be forced to act if they fail to do so. The ACCC will also consider significant proposals and law changes in other countries that have identified similar concerns. Earlier in 2021, Google buckled under the threat of the Australian government’s media regulation and started to pay for media content (see Australian Government Targets Web Giants).

It’s not just the Australian authorities that are looking to contain the growing social influence of big tech players. Regulators in the EU and US have also been looking into the potential anticompetitive behaviour of these companies. At a recent US Senate antitrust hearing, the focus was on the dominance of the Apple and Google app stores, asking whether the companies abuse their power at the expense of smaller rivals. App-makers like music streaming service Spotify and dating services giant Match, which owns the Tinder app, have long complained that mandatory revenue sharing for sales of digital goods and strict inclusion rules set by Apple’s App Store and Google’s Play store limit competition.

Also in the US, the antitrust trial brought against Apple by Epic Games started in California this week, and in Europe, the European Commission levied antitrust charges against Apple last week, after a complaint led by Spotify that centred on music streaming services.

In China, authorities have imposed a fine of $2.8 billion on Alibaba for insisting on exclusivity for sellers using its platform, and this was the first part of a wider crackdown on anticompetitive practices by China’s larger Internet players.

In truth, the big web players face a wall of regulation and litigation that will take some time to work through. Some of this is because their novel services introduce features that hadn’t been considered in current rules, so they’re pushing at the boundaries of regulation. But it’s also partly because the systems and policies they put in place seemed reasonable when those services were just starting, such as the app store conditions, but now look like global monopoly positions.

We’re at a point in history where countries are facing up to companies of a similar scale, and change will be forced on these companies. The next few years will be turbulent.