Apple says iOS has alternative app distribution because the internet exists

Telling the ACCC that users of iOS can go to a website to purchase and consume digital content or services, in its argument centred on discrediting the belief that Apple has market power.
Written by Asha Barbaschow, Contributor

Apple has responded further to the Australian consumer watchdog's probe of app marketplaces, this time rejecting characterisation that the Apple App Store is the most dominant app marketplace and saying there are other options for iOS users, such as by going to a website.

"Apple perceives and treats other distributors of apps, for platforms other than iOS, as significant competitors whose pricing and policies constrain Apple's ability to exercise power over developers," the iPhone maker said in a submission [PDF] to the Australian Competition & Consumer Commission (ACCC)

"Apple is not in a position to disregard the environment in which its app marketplace operates and does not accept the Commission's characterisation of the Apple App Store as 'the most dominant app marketplace by a large margin'."

The app store practices of Apple and Google are under the microscope by the ACCC as part of its digital platforms probe. The ACCC is concerned with the market power held by both tech giants in the app marketplace space.

In its submission, Apple argues that the ACCC's position is based incorrectly on the assumption that there is a relevant market failure arising from Apple's purported market power.

"Apple does not believe that, properly examined, that assumption is correct in the wider online context in which the app marketplace operates and is concerned that such an assumption means that the Commission's analysis may not be examining whether that assumption is well founded as a starting point," it said.

It believes that there is a healthy, competitive market.

Apple said it does not consider that it has a substantial degree of power in any market relevant to the issues that are the subject of the ACCC's current inquiry, nor does it agree that there is a market failure that requires regulatory intervention or legal action to address.

"Apple faces competitive constraints from distribution alternatives within the iOS ecosystem (including developer websites and other outlets through which consumers may obtain third party apps and use them on their iOS devices) and outside iOS," it said.

"Even if a user only owns iOS-based devices, distribution is far from limited to the Apple App Store because developers have multiple alternative channels to reach that user.

"The whole web is available to them, and iOS devices have unrestricted and uncontrolled access to it. One common approach is for users to purchase and consume digital content or services on a website."

The Cupurtino giant also believes the Apple App Store competes directly with other software distribution platforms, such as Google Play, Samsung Galaxy, and Amazon app stores, even though access to these "alternatives" is not granted on iOS.

It also said it competes with various web-based app stores such as Steam, Epic Games Store, PUBG, AppStream, Chrome Web Store, Setapp, or Microsoft Store.

Currently, app developers are not able to 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% to developers on the value of these transactions or any time a consumer buys their app. It did reduce this in November for some under its new offering, the App Store Small Business Program, which slices commissions in half to 15% if developers earn under $1 million from all of their apps. Commissions revert to 30%, however, if earnings cross the $1 million mark. 

Apple told the ACCC its practice of charging a commission on certain types of transactions is not unique.

"Many platforms charge commission rates comparable to or in excess of Apple's … many platforms also charge users a service fee for payments on top of their commissions, while Apple does not," it said.

"Equally, anti-circumvention provisions are necessary to protect consumers and partners alike and reduce free-riding by requiring transactions to take place on their secure platforms and to safeguard the business model adopted."


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