Apple Inc. recently warned that draft rules from the European Union requiring the company to open its mobile operating system to third-party apps would pose a security risk to its users.
A statement from the company, which expanded on comments made by CEO Tim Cook, said that if it were required to support the “sideloading” of apps (that is, not directly from its App Store), it would be “easier for cybercriminals to target them.”
The proposed Digital Markets Act, however, is an example of good legislation coming out of Europe. It aims to establish a set of “narrowly defined objective criteria for qualifying a large online platform as a so-called ‘gatekeeper.’” It would focus primarily on “large, systemic online platforms” that meet three criteria:
- The company must have a strong economic position.
- The company must have a good intermediation position. That is, it links a large user base to a similarly large number of businesses.
- The company must have an entrenched and durable position in the market.
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Under the proposed legislation, new innovators and tech startups would no longer be hindered by monopolistic, duopolistic or gatekeeping behaviour from big tech companies that already dominate relevant markets. It means Apple won’t be able to decide what apps users are allowed to install on their mobile devices. It would also stop the company from engaging in anti-competitive behaviour designed to drive its hardware users to become entrenched in its software ecosystem.
The proposed Digital Markets Act poses a huge problem for Apple – increasingly a software and services business that uses its hardware wing as a gateway to attract customers.
This year, Apple’s services revenue reached US$16.9 billion in the first quarter of the year – up from US$13.3 billion just a year earlier. Apple now has a subscription music service, subscription television service, an online cloud service, Microsoft Office-like apps and more.
Apple is even working to make it difficult for iPhone and iPad users to use non-Apple services for games, forcing users to subscribe to its Apple Arcade game plan.
While Apple hasn’t explicitly banned other game platforms, it has opted for a constructive dismissal-style approach that gives the company plausible deniability. The App Store, where people download apps and services approved by Apple, requires the developers/owners of apps to hand over 30 per cent of revenue made through those apps. For some, it’s a price worth paying to tap into a market of 1.5 billion active iOS devices. But it destroys the business model of others.
Epic Games filed a lawsuit against Apple over its 30 per cent rate, arguing that it made services prohibitively expensive to the end-user and impacted the gaming company’s revenue structure. Microsoft experienced similar trouble and was forced to drop its launch of a game-streaming Xbox service on iPhone, instead encouraging users to access the service through a browser.
iPhone and iPad users who prefer non-Apple game streaming services are forced to use buggy and less-than-convenient traditional websites to play those games because gaming providers wouldn’t be able to maintain a subscription streaming model if 30 per cent of that monthly revenue were handed over to Apple.
How can Apple claim this is a matter of security?
There’s are compelling arguments for this new European legislation.
Restricting Apple’s anti-competitive behaviour allows users to enjoy any software they prefer on their phones. And it rolls back big tech’s ability to censor social media apps that conservatives typically prefer. And it threatens the Apple-Google duopoly of the last decade.
The Digital Markets Act is a start, and the reasonable next step is app neutrality. Alternative operating systems and platforms outside of Google Android and Apple iOS must be able to compete in this mobile device space.
Not only do Google and Apple control what apps can be installed on their operating systems, but they establish hurdles that make it harder for competing ecosystems to use these same apps. Developers may produce software that can easily run on other platforms, but those platforms are denied access to the software by the Google-Apple duopoly – making it impossible for users to choose non-Apple and non-Google devices to perform everyday tasks like online banking, using social media and viewing content.
Google blocks full use of apps developed for Android on competing operating systems, including Amazon’s Fire OS, the now-retired BlackBerry 10 OS and the upcoming Windows 11 operating system, by denying access to Google Play services.
Android apps technically run on those operating systems, but many run inefficiently or without full access to various services simply because Google denies access to those services.
If you want to use apps, you must use Apple or Google – and if you use Apple or Google, you must only use the apps they allow you to use.
The Digital Markets Act could be a step toward app neutrality and a freer operating system market that gives users a choice.
Jack Buckby is a research associate with the Frontier Centre for Public Policy.
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