Australian Regulator Proposes New Rules to Cut Apple, Google App Store Fees Due to Antitrust Concerns

Regulators are finally starting to take notice of the whopping 30% fee that Apple’s App Store and Google’s Play Store can charge developers on in-app purchases (IAPs). Australia’s antitrust watchdog, the Australian Competition and Consumer Commission (ACCC), looks like it will be the first to allow developers to avoid paying Apple and Google a massive percentage of every in-app purchase.

The chair of the ACCC, Gina Cass-Gotlieb, said that “If our country doesn’t take the step to empower this so that this obligation is there, it won’t be offered.”

Regulatory experts suggest that this move stems from the Morrison Government’s direction to the ACCC to consult on a code of conduct for digital platforms and media companies. While a new government is now in place in Australia, it seems like it will still be following up on the ACCC’s suggestions.

The ACCC called for a code to fight anti-competitive behavior on digital platforms such as Google and Apple’s app stores. It specifically noted that the platforms needed to be policed for self-preferencing, unfair business dealings, and impediments to interoperability. It also wants to ensure that users can actually switch services.

The Fight Against Unfair App Store Fees Starts With Fortnite

There has been little actual progress on the front of fighting the anti-competitive practices of Apple and Google in their app stores until recently. Developers and gamers have been frustrated with their incredibly high fees for years but only now is it starting to reach the ears of regulators.

Epic Games, the creator of the smash hit game Fortnite, is easily one of the most important players in this fight. It was banned from both Google and Apple’s app stores for circumventing their IAP fees by offering a separate IAP payment method. Soon after it was removed it sued both Apple and Google on the same day. It argued that they were unfairly leveraging their total dominance over the app store market and harming competition.

The lawsuits focused on the fees themselves, rules banning other payment methods for IAPs that would circumvent the fees, and the 2 companies’ control over app distribution in general. The Apple lawsuit has already been decided, with the court ruling in favor of Apple on 9 of the 10 counts.

It wasn’t all bad, however, as it ruled that Apple was not allowed to stop app developers from telling users about other IAP payment methods. This means that apps can now direct users to their websites to make purchases there without paying the massive IAP fee. This is only a small concession to developers though so the fight goes on.

Epic Games appealed the ruling but the appellate court upheld the initial ruling. Apple is also planning to appeal the decision to win back the 10th count that it lost in the original hearing. The Epic Games vs Google lawsuit is still ongoing and the case is planned to be put before a jury on November 6, 2023.

Epic Games has also been joined in the lawsuit by Match Group, the massive conglomerate that owns most of the top dating apps including Tinder, Hinge, Match, Meetic, OkCupid, Pairs, Plenty Of Fish, and more. TechCrunch reported that a whopping 3 dozen state attorneys general have joined the case as well.

The first ruling was quite disappointing for Epic Games and every single app publisher in the market but the tides may be changing soon.

Regulators Are Finally Taking Notice

Antitrust regulators in the UK and Australia are finally starting to notice the anti-competitive practices of Google and Apple’s App Stores and may soon take action. The UK’s Competitive Market Authority or CMA opened a probe back in March of 2021. In 2022, the watchdog published a breakthrough report on the mobile ecosystem, finding that there are massive concerns over the dominance of Apple and Google that require regulator attention.

Regulators are also noticing that these practices are also harming end users, not just developers. Many apps increase their prices to be able to survive the massive fee.

Seeing an increasing amount of companies raise subscription prices to cover Apple’s 30% fee. I’m wondering how this will affect both Apple & the consumer long term? pic.twitter.com/4AB8f0MrVb

— Nate O'Brien (@nateobrienn) July 24, 2023

Even though it has been more than a year since its report was released, the CMA hasn’t taken action. Until it does, developers are taking it into their own hands to litigate this issue in court. A massive class action lawsuit was just brought against Apple by developers in the UK seeking over a billion dollars in damages for what they believe are illegal, anti-competitive practices.

The plaintiffs point to a multitude of recent reports, including the CMA’s 2022 report, a commissioned analysis from Compass Lexecon, and a US House Judiciary Committee report, that all support their case. With all of the proof of anti-competitive behavior including the harm it has done to developers and the incredible profits that Apple made from it, much of which comes from the UK’s CMA directly, it seems likely that the lawsuit will secure some kind of win for the developers.

If they do win, it may lead to regulation to ensure that the practices end as soon as possible in the UK and other countries may soon follow. Australia seems to already be on its way to fighting these practices with its own legislation too so there may soon be a tidal wave of regulation against both Apple and Google.

Furthermore, regulators may take notice of the other potentially anti-competitive practices of big tech companies such as Google’s dominance over search or ad distribution.

Related Articles:

• UK Class Action Lawsuit Against Apple for App Store Antitrust Violations Seeks Over $1 Billion in Damages
• Date Set for a Trial by Jury in Match Group and Epic Games Antitrust Case Against Google