With Epic Games v. Apple ongoing, a subcommittee of the US House of Representatives calls the App Store a monopoly

While Epic Games attempts to prove that Apple has violated federal antitrust law in a high-profile lawsuit, a highly anticipated report from a subcommittee of the US House of Representatives calls the iPhone maker’s App Store a monopoly. It makes “supernatural” profits and prevents competitors from entering the market.

In court against Epic Games, Apple has fought these labels, as Epic attempts to paint the tech giant as stifling competition by not allowing developers to access the iPhone outside of the App Store and forcing developers to use the system. Apple’s in-app payment, which comes with a 30% fee.

The report, released Tuesday afternoon by the House of Representatives antitrust, business and administrative law subcommittee, analyzed the market power of Apple, Google, Amazon and Facebook.

Epic sued Apple for the way it distributes apps and demands in-app fees, after its popular game Fortnite was released from the App Store for installing a payment system that circumvented Apple’s system. It was removed from the Google Play Store for the same reason and Google was added to the lawsuit.

While Epic’s challenge continues in court, Fortnite players have been unable to download the newest version of the game on the iPhone.

Regarding Apple, the subcommittee said that Apple controls all software distribution on iOS devices, such as iPhones and iPads.

“As a result, Apple exercises monopoly power in the mobile app store market, controlling access to more than 100 million iPhones and iPads in the United States,” the report says.

While Apple’s technology has generated significant benefits for app developers and consumers, the report says, “in the absence of competition, Apple’s monopoly power over the distribution of software to iOS devices has hurt competitors and the competition, reducing quality and innovation among application developers “and increasing prices and reducing options for consumers.”

Apple has argued that its App Store policies, especially its limits on how apps can be added to an iPhone, are critical to maintaining a fair and secure platform. He is opposed to the idea of ​​allowing users to download applications directly, as he would then lose the ability to browse them.

Epic has not yet responded to a request for comment from The News & Observer.

In an emailed statement, Apple said it “vehemently disagrees” with the conclusions of the Congressional report.

“Our company does not have a dominant market share in any category in which we do business,” the company said in the statement. “… The App Store has enabled new markets, new services and new products that were unimaginable a dozen years ago, and developers have been the main beneficiaries of this ecosystem.”

The company added that its commission rates are in line with those charged by other app stores and game markets, and that its careful management of the App Store has prevented tens of thousands of apps that violate consumer privacy from accessing the system. iOS.

“Competition drives innovation and innovation has always defined us at Apple. We work tirelessly to deliver the best products to our customers, with security and privacy at their core, and we will continue to do so,” Apple wrote.

The subcommittee’s report, presented by the committee’s Democratic leadership, does not offer direct recommendations on ways to challenge the market power of the App Store, though it asks Congress to review the country’s antitrust laws to reflect the current dynamics that have created the technology.

Republican committee members agreed with some, but not all, of the report and planned to produce their own report in the coming days, The News York Times reported.

State and federal officials are also conducting antitrust investigations at several of the nation’s big tech companies, and the Justice Department is expected to file an antitrust lawsuit against Google in the coming days, The Washington Post reported.

Matt Perault, director of the Center for Science and Technology Policy at Duke University, said Epic could use the report as it continues to argue in court that Apple is a monopoly.

“The report’s findings may help Epic build a factual record against Apple as Epic will be able to draw on documents and analysis that occurred during the course of an extensive 15-month investigation,” Perault said in an email.

It also shows that public perception of big tech companies may be changing. Epic scheduled its lawsuit to be filed just weeks after Amazon, Facebook, Apple and Google faced public questions on Capitol Hill about their market power.

“Apple’s inclusion in the report also shows that it may no longer be exempt from the conversation about big tech and competition, and may increasingly be subject to the kind of relentless scrutiny other technology companies have faced.” said Perault.

Google has about 47% of the US mobile operating system market and Apple captures about 52%, according to the report. The report notes that, unlike Apple, Google allows Android phone users to download apps outside of its own app store. But Google has created significant friction by using that process to download apps, the report says, and developers who have opted for it have seen their downloads drop significantly.

Before suing Google in August, Epic had decided to return to the Google Play store after boycotting it for 18 months.

The House of Representatives subcommittee report says the “domain type allows Apple and Google to set the terms and conditions that application developers must adhere to, leaving developers with the option to comply or lose access to consumers. “.

In court, Epic’s attorney, Gary Bornstein, called Apple’s App Store anti-competitive. “We would like to distribute directly on the iPhone without going through the App Store,” he told a judge, which would allow the company to use its own payment system.

Epic also operates its own app store, called the Epic Games Store.

Earlier this year, Epic Games CEO Tim Sweeney reached out to Apple and asked for permission to allow users to download the Epic Games Store through the App Store. Basically, the move would have allowed users to bypass the App Store to download video games. Apple rejected the request.

The Congressional report found that it is basically impossible for something like the Epic Games Store to exist on smartphone operating systems in the US.

“Due to the control that Apple and Google exercise over the distribution of software in their mobile ecosystems and the improbability of the entry of a new competitive mobile operating system,” the report said, “it is unlikely that a new and competitive app store will be able to successfully challenge dominant app store operators. ”

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