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Is It Better to Address the Apple-Google App Store Duopoly Through Antitrust or Regulation? 

Photo by Diego Antonio Maravilla Ruano, via Getty Images

A new paper analyzes antitrust investigations and private litigation initiated against the Google and Apple app stores, exploring how the main anticompetitive practices within app stores can be scrutinized under current antitrust rules and the potential role played of regulation in bridging enforcement gaps. 


The antitrust debate on app store practices is all over the news almost every day. Last month, the Paris Commercial Court fined Google for abusive dealings with developers, while the Dutch competition authority issued a tenth weekly penalty payment against Apple for failing to comply with its decision to allow dating apps on its App Store to use non-Apple methods of payment. Yet, the US Court of Appeals for the Ninth Circuit will soon rule in Epic’s appeal over the Californian District Court ruling in its case against Apple. 

Antitrust authorities, courts, and policymakers around the world are concerned about the strategic role played by Apple and Google as gatekeepers to their app stores, which are closely integrated into their mobile operating systems. By this view, controlling their ecosystems, Apple and Google are deemed to act as private regulators establishing rules that apply to all players using the app store. Moreover, because of their dual role as referees and players on their platforms, they might be incentivized to ensure preferential treatment for their own apps and undermine the competitive pressure originating from rival apps. According to this view, the practice of charging commission fees on third-party apps, the imposition of anti-steering provisions (which prevent developers from informing users of alternative options for purchasing paid content), and restrictions on the freedom of choice regarding payment systems, the lack of transparency in the app review process, and the refusal to share near-field communication (NFC) functionalities that would allow rival apps to provide “tap and go” payment services emerged as some of most worrisome conducts.

Against this background, alongside several investigations, Google and Apple’s duopoly has been the subject of market studies (e.g., by the Australian Competition and Consumer Commission, the UK Competition and Markets Authority, and the US House of Representatives) and legislative initiatives. Indeed, the upcoming European Digital Markets Act and UK code of conduct, the German Digitalization Act, and some US bills (like the American Innovation and Choice Online Act and the Ending Platform Monopolies Act), and recent legislation in South Korea include provisions that will significantly affect app stores and sometimes even explicitly target their governance by, for instance, prohibiting self-preferencing and anti-steering provisions, imposing the possibility of sideloading (i.e., installing apps without going through an app store) and un-installing pre-installed apps, ensuring data portability and interoperability.

Besides their differences, by envisaging a new competition regime in digital markets, these international initiatives share similar concerns and goals. Notably, they essentially rely on the premise that current antitrust rules are unfit to effectively address the new challenges posed by digital markets and that large online platforms should be treated as common carriers, and thus subject to public utilities-style regulation and neutrality regime. In particular, with specific regard to app stores, these regulatory interventions aim to introduce both device and platform neutrality. While the former includes provisions on app un-installing, sideloading, app-switching, access to technical functionality, and the possibility of changing default settings; the latter entails data portability and interoperability obligations, and the ban on self-preferencing, sherlocking (i.e., the use of data of business users to compete against them), and unfair access conditions.

Against this backdrop, our new paper (forthcoming in Antitrust Bulletin) analyzes antitrust investigations and private litigation initiated against the Google and Apple app stores in different jurisdictions, exploring how the main anticompetitive practices within app stores can be scrutinized under current antitrust rules and the potential role played by regulation in bridging alleged enforcement gaps. Due to the relevance of app stores within digital ecosystems, they represent the perfect testing ground for research aimed at investigating whether regulatory interventions are better suited to tackling their seemingly unique features.

“Our research suggests that strategies and practices often described as new and peculiar to app stores may still be well-assessed pursuant to traditional antitrust categories.”

What Is the Added Value of Regulation?

Our research suggests that strategies and practices often described as new and peculiar to app stores may still be well-assessed pursuant to traditional antitrust categories. Notably, a significant amount of cases involve refusals to deal with rivals. Namely, there are refusals to deal that occur in the primary market of Apple’s and Google’s ecosystem (access request to the operating system in order to deliver a rival app store) and refusals involving a secondary market that poses economic threats to their core business or into which Apple and Google are vertically integrated (access request to their app stores in order to supply a rival app). 

Further, the European framework allows antitrust enforcers to assess app stores’ pricing practices from the perspective of the margin squeeze strategy. Indeed, Google and Apple could be considered to be vertically integrated firms holding a dominant position in an app distribution market and competing downstream with third-party app developers for which access to the app store is a key input. Moreover, app stores may attempt to keep some activities for themselves by combining the sale of two products or services—namely, refusing to sell one product unless the buyer takes the other. This practice can be seen as a form of tie-in, according to which a dominant player can leverage its market position in the tying product, making the purchase of the latter subject to the acceptance of another (tied) product. Finally, dominant platforms may be investigated for using their control of app stores to discriminate against and apply to some rivals’ more onerous conditions than their own downstream businesses (primary line injury) or other firms (secondary line injury).

After all, the obligations envisaged in regulatory initiatives are inspired by antitrust investigations. For instance, looking at the European Digital Markets Act, the prohibition of combining personal data across the gatekeepers’ services is clearly inspired by the German Bundeskartellamt case against Facebook; the rule on most favored nation clauses (or parity clauses) targets the long-standing disputes between competition authorities and online travel agents (Booking.com and Expedia), as well as the European Commission e-books case against Amazon; another rule codifies the ex ante treatment of self-preferencing raised for the first time by the European Commission in Google Shopping; the investigations launched on Amazon Buy Box (and more recently on Facebook Marketplace) by the European Commission and some national antitrust authorities seem to have inspired the ban on sherlocking. From this perspective, the added value brought by regulation appears essentially related to the possibility of avoiding the hurdles and burdens of standard antitrust analysis. 

Moreover, at least in Europe, in the aftermath of the Google Shopping ruling, antitrust enforcers may exploit an additional and convenient tool that would allow them to skip legal standards and evidentiary burdens required to prove traditional anticompetitive behavior, thereby pursuing the very same goal of regulatory reforms in digital markets. In Google Shopping, the European Commission found that the discriminatory treatment of rivals by a vertically-integrated search engine may amount to an abuse of a dominant position if the platform gives an illegal advantage to its own comparison shopping service by systematically ensuring that it is prominently placed, demoting rival comparison shopping services in its search results. By upholding the European Commission’s decision, the General Court opened the door to the emergence of self-preferencing as a novel theory of harm and, despite the uncertainty about its features and boundaries, competition authorities may be eager to embrace a wide application of such new label as a catchall provision forbidding any leveraging strategy. 

In addition to the possibility of providing an enforcement shortcut, regulation appears better suited to support interventions aimed at implementing industrial policy objectives. This applies, in particular, to provisions prohibiting app stores from restricting sideloading, app un-installing, the possibility of choosing third-party apps and app stores as defaults, as well as provisions that would mandate data portability and interoperability. 

However, on the flip side, by questioning the core of platform business models and affecting their governance design, regulatory proposals may overlook the differences between business models, cause unnecessary overreaching, and jeopardize the profitability of app store ecosystems. The value of an ecosystem is, indeed, strongly dependent on the quality of the offer provided by third-party business players operating within it. As a consequence, app store providers rely heavily on governance mechanisms to preserve the integrity and value of the whole ecosystem.

Finally, regulatory interventions are expected to better deal with remedies involving product design by mandating data portability and interoperability, or enabling sideloading, app un-installing, and alternative app stores. Indeed, looking at the antitrust enforcement, despite the recent ruling in the European Google Shopping case, the issue of the appropriate remedy is still not defined. However, enforcers would have faced the very same problem also applying the upcoming regulatory provisions. Further, because of the technical nature of the measures at stake, mandating interoperability is not necessarily conclusive and may generate lengthy and exhausting litigation. 

In conclusion, the analysis of the most relevant anticompetitive practices carried out by app stores supports the idea that antitrust law enjoys considerable leeway in keeping up-to-date with market dynamics, providing a less intrusive and more individualized approach. Although digital markets have some unique characteristics, they are nevertheless susceptible to fact-specific antitrust enforcement, particularly when it comes to exclusionary practices. Further, regulatory interventions may face the very same difficulties already experienced by antitrust enforcers in crafting feasible and effective solutions involving product design. For these reasons, in comparing the scope and potential impacts of the antitrust toolbox with regard to regulation within the app economy, the actual ability of broad-brush public control to strike the right balance between competition and innovation remains unclear.

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Giuseppe Colangelo is a Jean Monnet Professor of European Innovation Policy and an Associate Professor of Law and Economics at University of Basilicata (Italy). He also serves as Adjunct Professor of Markets, Regulation and Law, and of Competition and Markets of Innovation at LUISS (Italy). He is fellow of the Stanford Law School and University of Vienna Transatlantic Technology Law Forum (TTLF), the scientific coordinator of the Research Network for Digital Ecosystem, Economic Policy and Innovation (Deep-In), and an academic affiliate with the International Center for Law & Economics (ICLE). His primary research interests are related to competition law, market regulation, innovation policy, intellectual property, and economic analysis of law. His work has been published in The Antitrust Bulletin, Journal of Antitrust Enforcement, Journal of Competition Law & Economics, World Competition Law and Economics Review, European Journal of Legal Studies, Computer Law & Security Review, Queen Mary Journal of Intellectual Property, European Competition Journal, International Review of Intellectual Property and Competition Law, Journal of European Consumer and Market Law, International Data Privacy Law, International Journal of Law and Information Technology, Journal of European Competition Law and Practice, and European Business Law Review, among the others.