US Congress report finds 30% Apple and Google app store ‘tax’ anti-competitive2 min read . Updated: 08 Oct 2020, 05:14 PM IST
- Mobile app developers who appeared before the US Congress during the course of the investigations said that this fee is now increasingly being passed on to consumers
NEW DELHI: Indian firms which have been up in arms ever since Google announced a 30% fee on Android app developers—dubbed by some as a ‘play store tax’—have an unlikely ally now: the US Congress.
A new report based on a 16-month-long investigation into the business practices of Big Tech companies by the Congress’s House Judiciary committee, which is analogous to an Indian parliamentary committee, has found that app store fees of the kind that Apple and Google charge could be potentially anti-competitive.
Since Apple and Google also develop and distribute apps that directly compete against third-party developers in their app stores, this dynamic could allow them to exert “gatekeeper power" to potentially “distort competition" which could harm consumers, the report says.
While Apple, in particular, made the case before the committee that they’ve made investments to develop the App Store and could indeed charge for the service, the findings in the report indicate that the company could be making windfall gains purely due to its monopoly position. Citing market estimates, Congressional investigators projected Apple’s net revenues from the App Store (primarily from a fee of 15-30%) at $17.4 billion in FY2020. The estimated cost of running the App Store, meanwhile, is less than $100 million.
Mobile app developers who appeared before the US Congress during the course of the investigations said that this fee is now increasingly being passed on to consumers.
In India, it is Google, and not Apple, which has been at the centre of a firestorm in recent weeks. Calls for an ‘Indian app store’ have only grown louder and Paytm has even launched a mini app store (which lacks many of the functionalities of a full-fledged app store).
Based on the direction in which US tech regulation seems to be headed, India must also revisit its commitment to net neutrality, said Apar Gupta, a lawyer and executive director at the Internet Freedom Foundation. “Given that smartphone app stores are the entry point to so many online services, it should not be discriminatory," he said.
App store owners have an incentive to impose fees or introduce guidelines that could be discriminatory, Gupta said. “India should approach this through the core principle of net neutrality, which potentially applies to even app stores and device operating standards. It’s not just about internet service providers (ISPs)."
“There is a legitimate issue beyond the Paytm drama. This is a regulatory issue that affects a lot of small developers," he added.