Apple and Google App-Store Dominance Gives DOJ Antitrust Fodder

Apple and Google App-Store Dominance Gives DOJ Antitrust Fodder

The start of broad government antitrust investigations into the U.S. technology industry has revived questions about Apple Inc. and Google’s dominance of app stores and the fees they charge to developers.

U.S. enforcement agencies recently split oversight of the largest U.S. tech companies, with the Justice Department focusing on Apple and Alphabet Inc.’s Google, according to people familiar with the matter.

The government hasn’t said why it’s grouping Apple and Google under Justice, or how it might apply antitrust law to their businesses. But a lawsuit filed Tuesday underscored growing developer ire over app stores, the vast digital bazaars showcasing millions of games, productivity tools and other software available for download onto handheld devices.

Apple and Google have disparate main businesses, but they run the world’s two biggest app stores. More than $100 billion was spent through these marketplaces last year. Apple’s App Store handled 45% of that, while Google accounted for 25%. In the U.S., the two control more than 95% of all mobile app spending by consumers, according to Sensor Tower data.

This power means most developers must work with Apple and Google if they want to reach billions of smartphone users as customers. The companies take as much as 30% of app sales, creating highly profitable businesses -- but also a rising chorus of critics who see an exploitative duopoly.

“Developers and users have been hurt by this. Simply lowering their cut could spur all types of new apps and business opportunities," said the creator of a weather app at Apple’s annual developer conference in Silicon Valley on Tuesday. "I personally have an app idea that isn’t feasible because of this 30% tax."

The person asked not to be identified discussing such a sensitive topic. But others feel the same way. The developer of an iPhone app for customized basketball workouts and another developer who built a baby naming app sued Apple on Tuesday, claiming the company’s App Store suppresses competition.

Apple and Google didn’t respond to requests for comment on Tuesday. However, the companies have been preparing to defend themselves against any new antitrust scrutiny. Apple recently added a new section to its website to highlight benefits the App Store provides to developers. Read more

Click here to chat with us