The Commerce Department’s National Telecommunications and Information Administration (NTIA) said in a new report released Wednesday that the current mobile app store model is harmful to consumers and developers and recommended policy changes to fix it.
Mobile apps have become an important tool for participating in many aspects of daily life. Two companies — Apple and Google — act as the gateway to apps that people and businesses trust, NTIA found in its report, “Competition in the Mobile App Ecosystem.”
Corporate policies can harm consumers by raising prices and reducing innovation.
The NTIA report and recommendations are part of the Biden administration’s efforts to promote innovation and competition and level the economic playing field. NTIA is the President’s primary adviser on telecommunications and Internet policy.
As President Biden wrote in his Wall Street Journal, “we need to bring back more competition in the technology sector.”
“From finding links to chatting with loved ones, apps are a critical tool for consumers and an essential part of doing business online,” he said. Alan Davidson, Assistant Secretary for Communications and Information Commerce and Administrator, NTIA. “It is more important than ever that the mobile app market remains competitive. NTIA’s recommendations will make the app ecosystem fairer and more innovative for everyone.
“This report identifies important ways we can promote competition and innovation in the app market, which will benefit consumers, startups and small businesses,” he said. Bharat Ramamurti, Deputy Director, National Economic Council.
After extensive outreach and more than 150 comments from a variety of stakeholders, NTIA identified two key policy issues that stand in the way of creating a more competitive program ecosystem:
- Users are generally unable to get apps outside of the app store model run by Apple and Google. This means that innovators have very limited opportunities to reach consumers.
- Apple and Google create barriers for developers compete for users by imposing technical restrictions, such as limiting how apps can work or requiring developers to go through slow and non-transparent review processes.
While current app store policies offer some benefits to consumers, including the ability to tighten security controls, the report found that the costs far outweigh the benefits and that privacy and security protections can still be achieved in a more competitive environment.
The report recommends several changes to improve the app ecosystem for users, including:
- Users should have more control over their devices. They should be able to choose their own apps as default, use alternative mobile app stores, and delete or hide pre-installed apps.
- App store operators should not be able to “self-select” their apps in an anti-competitive manner. Operators should not be able to prioritize their programs as they appear in search results or discriminate against other programs similar to theirs.
- Operators should remove restrictions on alternative ways for users to download and install applications. Legal and regulatory measures should prohibit restrictions on sideloading, alternative app stores, and web applications while still maintaining appropriate freedom of privacy and security guarantees.
- Removing restrictions on in-app purchases. This can be done by banning requirements for developers to use app store operators’ in-app payment system.
As the report notes, new legislation and additional antitrust action will likely be needed to foster competition in the app ecosystem. The tools outlined in the report will help open up the app ecosystem to greater competition, innovation and potential benefits for users and developers. NTIA prepared the report in response to President Biden’s 2021 executive order on competition, requiring the administration to promote innovation and competition throughout the economy.
If adopted, NTIA’s recommendations would create fairer rules for the mobile app ecosystem, benefiting consumers and competition.
