The Biden administration is taking aim at Apple and Google for operating mobile app stores that it says stifle competition.
The finding is contained in a Commerce Department report released on Wednesday as President Joe Biden was set to convene his competition council for an update on efforts to promote competition and lower prices.
The report from the Commerce Department’s National Telecommunications and Information Administration says the current app store model — dominated by Apple and Google — is “harmful to consumers and developers” by inflating prices and reducing innovation. The firms have a stranglehold on the market that squelches competition, it adds.
“The policies that Apple and Google have in place in their own mobile app stores have created unnecessary barriers and costs for app developers, ranging from fees for access to functional restrictions that favor some apps over others” the report said.
In an op-ed in The Wall Street Journal in January, Biden called on Democrats and Republicans to rein in large tech firms without mentioning Cupertino, California-based Apple Inc. and Mountain View, California-based Google LLC by name.
Biden calls for “level playing field”
“When tech platforms get big enough, many find ways to promote their own products while excluding or disadvantaging competitors — or charge competitors a fortune to sell on their platform,” Biden said. “My vision for our economy is one in which everyone — small and midsized businesses, mom-and-pop shops, entrepreneurs — can compete on a level playing field with the biggest companies.”
A representative from Apple told The Associated Press that “we respectfully disagree with a number of conclusions reached in the report, which ignore the investments we make in innovation, privacy and security — all of which contribute to why users love iPhone and create a level playing field for small developers to compete on a safe and trusted platform.”
And a Google spokesperson said the firm also disagrees with the report, namely “how this report characterizes Android, which enables more choice and competition than any other mobile operating system.”
A legal battle over app store dominance is already playing out in the courts.
Apple defends “walled garden”
Apple has defended the area surrounding its iPhone app store, known as the “walled garden,” as an indispensable feature prized by consumers who want the best protection available for their personal information. It has said it faces significant competition from various alternatives to video games on its iPhones. And Google has long defended itself against claims of monopoly.
The so-called walled garden includes a payment system that funnels Apple commission revenue ranging from 15% to 30% on the purchases of some subscriptions and other digital services through its storefront. The setup generates an estimated $15 billion to $20 billion for Apple every year, which has helped lift its market value to nearly $2.4 trillion.
The Commerce Department report said “new legislation and additional antitrust enforcement actions are likely necessary” to boost competition in the app ecosystem.
Alan Davidson, the NTIA administrator, said the report “identifies where legislation would be needed to address some of these issues.”
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