Wednesday, February 1, 2023

U.S. Department of Commerce releases report on Competition in the Mobile Application Ecosystem: more breadth than depth, pretty good but not first-rate

Today the Department of Commerce's National Telecommunications and Information Administration (NTIA) released its Competition in the Mobile Application Ecosystem report (PDF) and issued a press release, NTIA calls for Changes to Boost Competition in Mobile App Markets. The report was ordered by President Joe Biden, who stressed the need "to bring more competition back to the tech sector" in a recent Wall Street Journal op-ed.

The press release says that--as the report itself notes--"new legislation and additional antitrust enforcement actions are likely necessary to boost competition in the app ecosystem." Unfortunately, the Open App Markets Act (OAMA) was not passed into law last year. There may be more of an opportunity for bipartisan consensus to bring it back than some people believe. House Republicans want to "[e]nsure app stores are not engaging in unfair or deceptive practices against developers"--but only "without expansive anti-trust authorities for [FTC] Chair Lina Khan." And almost a year ago to the day, the OAMA came out of the Senate committee with a 20-2 vote, after which many observers thought (as did I) that it was fairly likely to be adopted later that year. But no.

Last week it was reported that Apple increased its U.S. lobbying spend by 44% in 2022 (at the federal level). I commented on the extent to which that number is meaningful (the relative increase is plausible, but the absolute numbers are sandbagged).

The NTIA report released today quotes submissions from both sides. The most important players criticizing the current app store tyranny are Microsoft, Meta, Epic Games, and Spotify. The ones who primarily rush to Apple and Google's aid are the astroturfers from ACT | The App(le) Association and the "R Street Institute", which says things that are, in part, an insult to human intelligence.

The key strength of the 48-page NTIA report is that it provides a bird's-eye view of the mobile app store situation and of the views of key stakeholders in a way that readers can easily understand. The document covers a broad range of issues: not just the app tax but also the problem of arbitrary app reviews, changing rules, and even App Tracking Transparency (ATT).

It's suboptimal, though, and I don't just mean the fact that there are various typos (unusually many for a government document). As an app developer who tried to make a game work as a web app (and found the results extremely dissatisfactory), I believe the part about web apps could have raised several additional issues.

There are quotes from ACT | The App Association (again, it's actually an Apple Association) and the R Street Institute that argue small app developers benefit from the trust that end users place in apps they download from curated stores. First, if they trust an Apple or Google store, why wouldn't they also trust a Microsoft, Amazon, or Meta store? Second, independent software vendors (ISVs) have historically had great opportunities on open systems like Windows and the Mac (which compared to iOS is pretty open, though Apple may change that step by step). It's not like mobile app stores were needed so the little guys had a chance to succeed. I'm extremely cautious about what I download to my Windows computers (desktop and notebook) and never installed any malware (nothing was found whenever I scanned, and nothing ever happened that suggested the presence of malware), but even I install software from small developers: I'm just careful about where I obtain it from, but that doesn't mean I trust only Microsoft's own store.

Having said that, I definitely welcome the fact that the Biden Administration is urging Congress to legislate on mobile app stores. The OAMA should be revived, and that's what Senator Richard Blumenthal (D-Conn.) vowed to push for during this Congressional term. He is right that a bill that had bipartisan support at the committee stage (20-2) deserves a second chance.