Platform and Device Neutrality Regime: The New Competition Rulebook for App Stores?

• DOI: http://doi.org/10.1177/0003603X221103122
• Published date: 01 September 2022
• Date: 01 September 2022
• Subject Matter: Article

https://doi.org/10.1177/0003603X221103122

The Antitrust Bulletin

2022, Vol. 67(3) 451 –494

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DOI: 10.1177/0003603X221103122

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Article

Platform and Device Neutrality

Regime: The New Competition

Rulebook for App Stores?

Oscar Borgogno* and Giuseppe Colangelo**

Abstract

Among the numerous legislative initiatives implemented around the globe on digital platforms, some

of these provisions are explicitly directed toward app stores. As they have all the distinctive features

of multi-sided markets, app store owners represent the prototype of digital gatekeepers, controlling

access to mobile ecosystems and competing with business users operating on the platforms. In light of

the rule-setting and dual role of these gateway players, regulatory interventions are required in order

to ensure that large app stores are treated like common carriers or public utilities, thereby imposing

upon them a neutrality regime vis-à-vis new entrants. For the very same reasons, dominant app store

providers have been subject to an increasing number of antitrust investigations attempting to ensure

equal treatment and to avoid self-preferencing at the expense of rivals’ services. Against this background,

the article investigates whether antitrust provisions are flexible enough to curb anticompetitive practices

carried out by app stores and the extent to which regulatory interventions could, on the other hand, be

necessary in order to address the seemingly unique features of the app economy.

Keywords

digital platforms, app store, competition policy, neutrality, self-preferencing, interoperability

I. Introduction

App stores are at the forefront of the debate on the regulation of the digital markets. Indeed, they rep-

resent the prototype of multi-sided platforms, having all their distinctive features: the presence of sig-

nificant indirect network effects and economies of scale and scope leading to highly concentrated and

not easily contestable markets; the growth in ecosystems providing a variety of products and services

that serve as vital gateways for business users to reach potential end customers; the control and inter-

mediation power exerted by gatekeepers, which act as private regulators, determining the terms and

conditions under which users can join the network, playing a dual role as both intermediaries and trad-

ing operators on the platform.

*Bank of Italy, Rome, Italy; PhD Candidate, University of Turin, Turin, Italy; MSc, University of Oxford, Oxford, UK

**Jean Monnet Professor of EU Innovation Policy, and Associate Professor of Law and Economics, University of Basilicata,

Potenza, Italy; TTLF Fellow, Stanford Law School, Stanford, CA, USA

Corresponding Author:

Giuseppe Colangelo, University of Basilicata, 85100 Potenza PZ, Italy.

Email: giuseppe.colangelo@unibas.it

1103122ABXXXX10.1177/0003603X221103122The Antitrust BulletinBorgogno and Colangelo

research-article2022

452 The Antitrust Bulletin 67(3)

With regard to app stores, the gatekeeping position of Apple and Google, and the related concerns

about their rule-setting and dual role have been the subject of market studies launched by the Australian

Competition and Consumer Commission (ACCC),1 the Netherlands Authority for Consumers &

Markets (ACM),2 the U.K. Competition and Markets Authority (CMA),3 the Japan Federal Trade

Commission (JFTC),4 and the U.S. House of Representatives.5 Furthermore, the terms and conditions

for accessing app stores, such as in-app purchasing rules and restrictions on the freedom of choice

regarding payment apps on smartphones, are being scrutinized by courts and antitrust authorities all

around the world. Moreover, numerous legislative initiatives have been implemented to safeguard mar-

ket contestability and establish a level playing field by promoting regulatory approaches that essen-

tially aim to characterize large digital platforms as common carriers or public utilities in order to

impose upon them a neutrality regime. Notably, a new ex ante regulatory regime has been advanced in

the European Commission’s Digital Markets Act (DMA) proposal and in the CMA’s code of conduct

aimed at governing online platforms with “gatekeeping” position or “strategic market status,” respec-

tively.6 In pursuing the same goal, Germany has strengthened its national Competition Act (GWB),

introducing a new Section 19a which sets specific standards of conduct for undertakings of “paramount

significance for competition across markets.”7 In a similar vein, in June 2021, the U.S. House of

Representatives unveiled a five-bill antitrust package designed to curb the market power of large online

platforms representing “critical trading partners.”8

This approach was endorsed by the European General Court in the recent Google Shopping9 case.

The Court relied on a principle of equal treatment, considering it to be a general principle of the

European Union (EU) law inferred from case law applied to public undertakings.10

Despite their differences, the legislative initiatives cited above do share the same aims and concerns.

By and large, the call for action stems from the hurdles experienced by antitrust enforcers, aiming to

1. Australian Competition and Consumer Commission, Digital Platform Services Inquiry – App Marketplaces (2021), https://

www.accc.gov.au/media-release/dominance-of-apple-and-google’s-app-stores-impacting-competition-and-consumers.

Accessed Oct. 10, 2021.

2. The Netherlands Authority for Consumers & Markets, Market Study into Mobile App Stores (2019), https://www.concur-

rences.com/IMG/pdf/netherlands.pdf?59309/382a5b83e90b93529caf6e9943b8c0ec1062e1f2. Accessed Oct. 10, 2021.

3. UK Competition and Markets Authority, Mobile Ecosystems Market Study, Interim Report (2021), https://www.gov.uk/

cma-cases/mobile-ecosystems-market-study. Accessed Dec. 20, 2021.

4. The Japan Federal Trade Commission, Report Regarding Trade Practices on Digital Platforms (2019), https://www.jftc.

go.jp/en/pressreleases/yearly-2019/October/191031.html. Accessed Oct. 10, 2021.

5. U.S. House of Representatives, Subcommittee on Antitrust, Commercial, and Administrative Law, Investigation of

Competition in Digital Markets, Majority Staff Reports and Recommendations (2020), https://judiciary.house.gov/upload-

edfiles/competition_in_digital_markets.pdf?utm_campaign=4493-519. Accessed Oct. 10, 2021.

6. European Commission, Proposal for a Regulation on Contestable and Fair Markets in the Digital Sector (Digital Markets

Act), COM(2020) 842 final; UK Competition and Markets Authority, A New Pro-Competition Regime for Digital Markets.

Advice of the Digital Markets Taskforce (2020), https://www.gov.uk/cma-cases/digital-markets-taskforce. Accessed Oct.

10, 2021.

7. Gesetz zur Änderung des Gesetzes gegen Wettbewerbs- beschränkungen für ein fokussiertes, proaktives und digitales

Wettbewerbsrecht 4.0 und anderer Bestimmungen (GWB- Digitalisierungsgesetz), Jan. 18, 2021.

8. See H.R. 3816, American Choice and Innovation Online Act, https://www.congress.gov/bill/117th-congress/house-

bill/3816/text?r=43&s=1. Accessed Oct. 15, 2021; H.R. 3825, Ending Platform Monopolies Act, https://www.congress.

gov/bill/117th-congress/house-bill/3825/text?r=34&s=1. Accessed Oct. 15, 2021; H.R. 3826, Platform Competition and

Opportunity Act, https://www.congress.gov/bill/117th-congress/house-bill/3826?s=1&r=5. Accessed Oct. 15, 2021; H.R.

3843, Merger Filing Fee Modernization Act, https://www.congress.gov/bill/117th-congress/house-bill/3843?s=1&r=11.

Accessed Oct. 15, 2021, and H.R. 3849, Augmenting Compatibility and Competition by Enabling Service Switching

(ACCESS) Act, https://www.congress.gov/bill/117th-congress/house-bill/3849?s=1&r=1. Accessed Oct. 15, 2021.

9. General Court, Nov. 10, 2021, Case T-612/17, Google LLC and Alphabet Inc. v. European Commission.

10. Id. at para. 155.

Borgogno and Colangelo 453

remedy an enforcement failure.11 With regard to the digital markets, antitrust is considered to be falling

short mainly because competition rules apply ex post and require an extensive investigation on a case-

by-case basis. Therefore, corrective tools are required to speed up the enforcement process and to

achieve the result of prohibiting certain practices.

Against this background, some of the obligations envisaged are clearly addressed to app stores in an

attempt to introduce a platform and device neutrality regime. Notably, the European DMA, the German

Section 19a, and some of the U.S. bills (in particular, the American Choice and Innovation Online Act, and the

Augmenting Compatibility and Competition by Enabling Service Switching Act, and the Ending Platform

Monopolies Act) prohibit, for instance, the designated platforms from: discriminating between users by

engaging in self-preferencing and applying unfair access conditions; preventing users from sideloading (i.e.,

installing apps without going through an app store) and un-installing pre-installed apps; impeding data porta-

bility and interoperability; and imposing anti-steering provisions. Moreover, in August 2021, an ad hoc app

store bill (“Open App Markets Act”) was introduced in the U.S. Senate to reduce “gatekeeper power” in the

app economy.12 Finally, although the U.K. regime follows a principle-based rather than a rule-based approach

that relies on firm-specific codes of conduct, the CMA has also suggested a range of procompetitive interven-

tions (including third-party access to data, interoperability and common standards, interventions to overcome

consumer inertia and default bias, obligations to provide access on fair and reasonable terms, and separation

remedies) that cannot be achieved via codes of conduct and would have a major impact on app stores.13 In its

Interim Report on mobile ecosystems, the CMA has considered possible interventions aimed at addressing

Apple and Google’s market power, which include allowing sideloading and removing anti-steering provisions

and restrictions to alternative payment options for in-app purchases.14 The findings of the CMA’s market

study on mobile ecosystems will provide information on how the regime is designed and implemented by the

newly appointed Digital Markets Unit, supporting the development of codes of conduct in relation to app

stores and the potential use of the aforementioned procompetitive interventions.

However, the very first country to approve legislation on app stores was South Korea. Its Legislation

and Judiciary Committee, indeed, supported the amendment to the Telecommunications Business Act

which, among other things, will prohibit app store operators in dominant market positions from forcing

payment systems upon content providers and inappropriately delaying the review of, or deleting,

mobile contents from app markets.15

Against this background, this article aims to investigate whether antitrust provisions are flexible

enough to keep up with the dynamics of digital app stores and whether regulatory interventions are, on

the other hand, required in order to address their unique features.

The work is structured as follows. Section II describes the role and economic features of app stores.

Section III analyses antitrust investigations and private litigation initiated against Google and Apple

stores by focusing on the different practices at stake. Section IV illustrates the regulatory initiatives

recently implemented to address the seemingly distinctive features of the digital markets and the stra-

tegic role played by large online platforms. Section V explores how the main anticompetitive practices

within app stores can be tackled by current antitrust rules and the potential role played by regulation in

bridging the enforcement gaps. Section VI concludes.

11. Marco Cappai & Giuseppe Colangelo, Taming Digital Gatekeepers: The ‘more regulatory approach’ to Antitrust Law, 41

Comput. L. Secur. Rev. 105559 (2021).

12. S. 2710, Open App Markets Act, https://www.blumenthal.senate.gov/imo/media/doc/8.11.21%20-%20Open%20App%20

Markets%20Act%20-%20Bill%20Text.pdf. Accessed Oct. 15, 2021.

13. UK Competition and Markets Authority, supra note 6, at para. 4.68.

14. UK Competition and Markets Authority, supra note 3, at 27–31.

15. Jiyoung Sohn, Google, Apple Hit by First Law Threatening Dominance Over App-Store Payments, Wall Street J., Aug.

31, 2021, https://www.wsj.com/articles/google-apple-hit-in-south-korea-by-worlds-first-law-ending-their-dominance-

over-app-store-payments-11630403335?st=dh3dbi4h20et6lc&reflink=article_copyURL_share. Accessed Oct. 15, 2021.