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Brief:
- Spotify, the creator of “Fortnite” Epic Games and the owner of Tinder Match Group created an advocacy group called the Coalition for App Fairness (CAF) to pressure Apple and other app store keepers to change their rules on how they can operate the apps, according to an ad.
- Basecamp, Blix, Blockchain.com, Deezer, European Publishers Council, News Media Europe, Prepear, Protonmail, SkyDemon, and Tile are also among the founding members of the non-profit coalition, which is based in Washington, DC.
- CAF said that most app stores charge excessive fees and unfairly hinder competition by favoring their own products and services. The coalition published a list of 10 app store principles it wants app store operators to adopt. The principles include rules such as “no developer should be required to pay unfair, unreasonable, or discriminatory fees” and “a developer’s data should not be used to compete with the developer.”
Vision:
The CAF formation follows complaints from various app developers that app store operators like Apple have an unfair advantage as gatekeepers of online marketplaces. The coalition may find a sympathetic ear among consumers, policymakers, and other app developers as app store owners Apple and Google, along with tech giants Facebook and Amazon, face increasing antitrust scrutiny for possibly anti-competitive business practices.
While there are a handful of alternative app stores, Apple and Google oversee the most dominant hubs for app activity and support a billion-dollar economy of software developers marketing their products to consumers. Apple and Google generate significant revenue from their app stores by charging commissions for download fees, in-app purchases, and digital subscriptions. They also have unrivaled knowledge of which apps are most popular, which can give them an edge when deciding whether to acquire app developers or build their own rival apps.
Those fees have become a major source of conflict with a more vocal group of app developers, including Epic Games and Spotify. This year’s Epic complaints reached a fever pitch when it sued Apple and Google for removing its popular game “Fortnite” from their app stores. The game developer violated its rules when it introduced a payment plan to avoid paying a 30% commission on game transactions to tech giants. This month, Apple countered Epic Games, seeking damages for allegedly interfering with its customer relationships, Verge reported. The outcome of those lawsuits remains to be seen and may have an effect on the functioning of app stores.
Audio streaming platform Spotify has also criticized Apple’s fee structure for allegedly favoring rival service Apple Music. Like the video streaming company Netflix, Spotify introduced a way for subscribers to pay for a subscription directly instead of going through the App Store, which charges a 30% commission in the first year of a subscription and 15% since then. Match Group, which runs the dating app Tinder, and e-commerce company Rakuten have also criticized Apple for its policies on the App Store.
While Google faces antitrust scrutiny on multiple fronts, including its dominance in the programmatic advertising market, Apple’s control of the App Store is said to be a focal point for American researchers. Apple also faces a European Union antitrust investigation into the App Store and Apple Pay. It is still too early to tell whether companies will be forced to change their app store policies and fees, allowing app developers to get a larger share of revenue from in-app payments and downloads.
