App stores next digital realm under the ACCC microscope

The Australian Competition and Consumer Commission (ACCC) is moving its digital platforms battle to the app stores of major providers such as Apple and Google, concerned mostly with their transparency around data use, competitiveness, and also the type of apps they make available for download.

In compiling a report due early next year, the ACCC is seeking responses to two surveys: One for consumers and one for developers. It's also published an issues paper [PDF].

"Apps have become essential tools for daily living for many Australian consumers, a trend that is likely to have increased during the COVID-19 pandemic. Apps are, in turn, increasingly important for businesses as they promote, grow and run their enterprises," ACCC deputy chair Delia Rickard said.

"We want to know more about the market for mobile apps in Australia, including how transparent and effective the market is, for consumers as well as those operating in the market. We will also focus on the extent of competition between the major online app stores, and how they compete for app sales with other app providers."

As part of the probe, the ACCC said it will examine the experiences of consumers, developers, and suppliers, focusing on the use and sharing of data by apps, the extent of competition between Google and Apple's respective stores, and whether more pricing transparency is needed in the local mobile apps market.

Where data use is concerned, the ACCC wants a clearer understanding of the data-sharing arrangements between apps and app marketplaces.

"Do you feel that you receive satisfactory information about the data that apps you download collect from you, and who has access to that data?," the ACCC asks in the consumer survey.

It wants to know what data is collected on a consumer's app use and how it's used.

"Consumers are not always sufficiently informed about the amount and kinds of data collected (including from apps), and are not always given control over data collection," the issues paper adds.

Providing market statistics, the ACCC said it is estimated that 1.79 million apps are currently available for download on the Apple App Store and an average of 770 new apps are published daily. For the Google Play Store, an estimated 3.39 million apps are available for download and an average of 3,515 new apps are added to the store every day.

With Google and Apple dominating the market, the ACCC wants to determine the barriers to entry and expansion in app marketplaces.

The ACCC is also seeking views on the degree to which consumers are able to swap between app marketplaces, or use more than one, as well as to what extent consumers can successfully download apps outside of app marketplaces. It's also seeking to understand how users can provide feedback on misleading app reviews.

On competition, the ACCC wants to know if marketplaces have the ability to self-preference their own apps over those of third party app providers, and what determines the results of a search within a marketplace. It's also looking into phone app bloatware -- that is, apps that come pre-installed on a device.

With Apple and Google both collecting 30% of "in-app purchase" commission, or 15% in the case of subscription services, the ACCC said app providers have complained about the fees and, as a result, it will also be looking into the practice.

Focusing on scams, the ACCC is also seeking views on the prevalence of apps which may be harmful to consumers, processes in place to exclude or remove harmful apps, and mechanisms in place for reporting these apps to app marketplaces.

Where the relationship between app stores and developers is concerned, the ACCC is seeking information on the process for getting an app approved for distribution, how effective current review processes are, what level of ensuring quality and safety of an app is undertaken, and the overall relationship between developers and the platforms.

The app marketplace probe forms part of the ACCC's Digital Platforms work, which in July 2019 saw the watchdog make a total of 23 recommendations that covered competition, consumer protection, privacy, and media regulatory reform.

The ACCC is currently engaged in a battle between Google and Facebook as a result of its new Media Bargaining Code that is aimed at addressing the fundamental bargaining power imbalances between Australian news media businesses and major digital platforms.

The two tech giants in the centre of the stoush have both raised concerns about the draft code, calling it unfair and one-sided.

Meanwhile, Apple is engaged in its own legal battle with Epic Games, with the Fortnite publisher suing the Silicon Valley giant over its app store practices.

The row between the two surrounds the 30% sales cut Apple takes. But as reported by Bloomberg, Japanese game studios have concerns over Apple's inconsistent enforcement of its own App Store guidelines, the unpredictable content decisions, and lapses in communication.

As a result of the legal action kicked off by Epic, it is reported Japan's antitrust regulator will also step up its scrutiny of Apple's practices.

When announcing the ACCC would probe app stores last month, chair Rod Sims said the watchdog also had marketplaces such as eBay and Amazon in its sights.

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