The Antitrust Case against the Apple App Store (Revisited)

87 Pages Posted: 15 Dec 2020 Last revised: 28 Mar 2021

See all articles by Damien Geradin

Damien Geradin

Tilburg Law and Economics Center (TILEC); University of East Anglia (UEA) - Centre for Competition Policy; Geradin Partners

Dimitrios Katsifis

Geradin Partners

Date Written: December 7, 2020

Abstract

The Apple App Store is the only channel through which app developers may distribute their apps on iOS. First launched in 2008, the App Store has evolved into a highly profitable marketplace, with overall consumer spend exceeding $ 50 billion in 2019. However, concerns are being increasingly expressed on both sides of the Atlantic that various practices of Apple with regard to the App Store may breach competition law. The purpose of this paper is to examine whether this is indeed the case and, if so, how these concerns can be addressed. With these aims in mind, the paper first introduces the reader to the app ecosystem and the Apple App Store, with a focus on Apple’s in-app payment policies and the 30% commission charged for in-app purchases. After engaging critically with the distinction between apps selling “digital” and apps selling “physical” goods or services, we consider such distinction is unclear, artificial, and unprincipled.

The paper then critically reviews several practices of Apple that appear to be at odds with competition law and in particular Article 102 TFEU. We first discuss the issue of market definition and dominance with regard to the App Store. We find that Apple is a monopolist in the market for app distribution on iOS, as it is not subject to any meaningful competitive constraint from alternative distribution channels, such as Android app stores. The result is that Apple is the gateway through which app developers have to go in order to reach the valuable audience of iOS users. This bottleneck position affords Apple the power to engage in several prima facie anti-competitive practices. A first concern is that Apple may exploit app developers by charging excessive fees for the services it provides and by imposing unfair trading conditions. Second, based on four case studies, the paper illustrates how Apple may use its control of the App Store or iOS to engage in exclusionary behaviour to the detriment of rival apps. These practices should be investigated by competition authorities, as they are likely to result in considerable consumer harm, be it in the form of higher app prices, worse user experience or reduced consumer choice. The paper finally proposes a combination of concrete remedies that would address the competition concerns identified.

Keywords: Apple, App Store, Google, Google Play, IAP, excessive pricing, unfair trading conditions, exclusion, marketing restrictions, antitrust, EU competition law

JEL Classification: D42, K21, L12, L40, L86

Suggested Citation

Geradin, Damien and Katsifis, Dimitrios, The Antitrust Case against the Apple App Store (Revisited) (December 7, 2020). TILEC Discussion Paper No. DP2020-035, Available at SSRN: https://ssrn.com/abstract=3744192 or http://dx.doi.org/10.2139/ssrn.3744192

Damien Geradin (Contact Author)

Tilburg Law and Economics Center (TILEC) ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands

University of East Anglia (UEA) - Centre for Competition Policy ( email )

UEA
Norwich Research Park
Norwich, Norfolk NR47TJ
United Kingdom

Geradin Partners ( email )

Avenue Louise 475
Brussels
Belgium

Dimitrios Katsifis

Geradin Partners ( email )

Avenue Louise 475
Brussels
Belgium

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