Digital platforms: Competition and government oversight

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV.COM Ltd.

Do digital platforms give unfair precedence to their own apps? [Álvaro Ibáñez/Flickr]

Catriona Meehan proposes a series of questions that governments should ask in order to ensure fair competition between digital platforms and app developers. 

Catriona Meehan is the Director of EU Policy and Government Affairs for the Application Developers Alliance, an international association of app developers, publishers and innovators.

In Europe and in America, companies, legislators and government agencies are paying a great deal of attention to so-called “dominant” digital commerce and digital information platforms. The debates seem to focus around two basic questions: When should a platform be open to third parties? Can governments ensure fair competition between platform–owned and independent services?

For many years, courts and economists have scrutinised many a sector trying to answer these questions. Take pay-television service providers for example – they own programming networks that compete against independently owned networks. Broadcast stations produce TV programmes that compete against independent programmers. Even car manufacturers provide repair services that compete against independent repair shops. Do these industries offer any lessons relevant to mobile app competition?

Serious concerns are being raised that both Apple and Google are leveraging their platforms – their mobile operating systems and app stores – to unfairly advantage their own products in the competitive app market. Google is being scrutinised by the European Commission, which is concerned that (among other things) Google Play agreements with mobile device manufacturers are giving an unfair advantage to apps such as Google Search and Google Maps. Competition regulators in Europe and the US are also scrutinising Apple over the restrictions it imposes on apps that it competes against directly (particularly those that supply digital products, including music, video, news and storage).

Many platforms are innovative. Additionally, they can be extraordinary enablers of additional innovation and promoters of new opportunities. In the app industry, mobile platforms are also a critical infrastructure that enables coders to build and distribute new products and services.

It is useful to think analytically about when a platform turns from an enabler into a competitor, and then from a reasonable competitor into an unfair competitor.

Almost all platforms are practitioners of the time-honoured tradition of business “coopetition”, i.e. cooperatively enabling new businesses while also competing with them. One could assume that every independent app understands that if a market opportunity is substantial, a platform might one day become a competitor – and isn’t that okay? Fair competition promotes innovation, better products, improved customer service and aggressive pricing.

Here are some key questions that could help decide if a platform partner like Google or Apple is competing fairly or unfairly. Perhaps these same questions might apply to all digital platforms, including connected cars, smart homes, digital health and the Internet of Things. 

  1. If the platform has an affiliated distribution channel (e.g. an App Store), does the distribution channel offer only affiliated apps, or also independent apps that compete with the platform’s own apps?
  2. Is access to the platform conditioned on acceptance of terms (e.g. relating to pricing, features, automatic updates, user communications or promotional opportunities) that apply only to independent apps, or do they also apply to platform-affiliated apps? If the terms and conditions apply only to independent apps, does this distinction favour the platform-affiliated apps?
  3. Is access to the platform for competitive independent apps conditioned on acceptance of certain platform-provided services (e.g. payment, advertising or analytics)? If so, are all apps required to use those services, or only the apps that compete directly with platform-affiliated apps? Does the platform provide the same features of those services to independent apps that it provides its affiliated apps?
  4. Do the platform’s terms and conditions benefit users? Do they enable or restrict innovation, better service or lower prices?
  5. If the platform is delivered to consumers with apps pre-loaded, are all the pre-loads from the platform company, or are some preloads arranged by third party retailers or other partners?
  6. Does the platform prohibit retailers or other stakeholders from selling platform devices with independent competitive apps also pre-loaded?
  7. Are consumers able to select which apps they see in the order they choose, without regard to whether an app is pre?loaded or affiliated with the platform?
  8. Does the platform provide certain APIs to only its affiliated apps, and therefore enable experiences for consumers of platform?affiliated apps that rival apps cannot duplicate?
  9. Does the platform prohibit consumers from side-loading apps from independent distribution channels (including self-publishers)? Does the platform prohibit or limit features, upgrades or pricing when apps are side-loaded, or demand any control or revenue?

As today’s government inquiries develop, the app ecosystem will learn whether these questions or others provide critical inputs to decision makers. And then we will all be a bit closer to knowing if coopetition is fair or unfair, as our platforms and digital ecosystems continue to develop and innovate.

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