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According to the report 'Towards Regulating App Stores' by the Alliance of Digital India Foundation (ADIF), an industry body for India’s digital startups, and the Quantum Hub, iOS and Android are the major mobile operating systems, with a combined global market share of 99.28% (as of April 2022).
Thanks to pre-installed app stores, the App Store and Google Play have become the dominant shops through which developers distribute apps to mobile users. Although there are other app shops such as Amazon App Store, Microsoft Store, F- Droid, etc., and sometimes apps can be downloaded through websites, the volume of downloads through these channels pales in comparison to downloads through App Store and Google Play.
While many developers pay only a nominal fee to publish their app, developers who sell digital goods and services must pay a set commission rate for purchases of paid apps, subscription services purchases made within the app – known as "in-app purchases" (IAPs). The amount of the fee depends on the type of app and sometimes on the jurisdiction in which the app operates. The Apple App Store charges either a 15 or 30% commission for purchases of paid apps and IAPs, depending on the type of app. Similarly, Google Play charges either 15% or 30%, but this has not been strictly enforced until recently. Other shops, such as the Microsoft Store, charge 12% for games and 15% for other apps, while the Epic Games Store charges 12%.
The focus is on Apple and Google and their policies because of their vast market share. Google and Apple's policies affect a wide range of users and developers, and changes in their policies could change the market dynamics for many participants. One policy that has attracted a lot of attention in the recent past has been Google's decision to impose high fees on IAPs and paid apps, mandating that they use their payment system. Under the policy, developers would be effectively banned from using any other system to accept payments from customers.
The size and ubiquity of the dominant app shops, which benefit hugely from pre-installation on their own operating systems, makes it almost impossible to set a reasonable amount or threshold for fees.
Given the problems associated with Apple's and Google's monopoly, several regulators around the world have expressed concern about the policies of the dominant app shops.
Apple is currently under investigation by regulators in the US, Europe, Japan, Australia and India, while Google is also under investigation in the USA, Europe, India and other countries.
In December 2021, the Netherlands Authority for Consumers and Markets (ACM) found Apple's App Store to be in violation of the country's antitrust laws. Since then, it has imposed a series of (weekly) fines on Apple for, it claims, persistent non-compliance with its order. By 28 March 2022 these fines totalled €50 million and the regulator has threatened another round of fines "with a possible increase in the amount". On 28 March 2022, France also entered the fray, with the Paris Commercial Court imposing a €2 million fine on Google and requiring it to rewrite clauses in its agreements with developers that were deemed unbalanced within three months. The court said that Google had failed to provide a real justification for the fees charged.
To minimise harm and ensure competition in digital markets, some governments are considering pre-regulation, which can guide the behaviour of market participants by prescribing practices such as unbundling to help prevent negative consequences. In August 2021, South Korea passed a law prohibiting app shops from forcing developers to use their billing system, becoming the world's first major piece of legislation to affect app shop policy.
A bill introduced in the US Senate also seeks to impose similar restrictions. Another law, the Digital Markets Act, is currently pending in the EU.
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