Apple and Google face lockdown for cutting in-app purchases in Australia | Australian Competition and Consumer Commission (ACCC)

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Apple and Google could soon face new rules that allow app developers to charge for in-app purchases without paying a cut to the app store, the head of Australia’s competition watchdog said.

If our country doesn’t take the step to authorize this so that this requirement is in place, it won’t be offered, said Australian Competition and Consumer Commission (ACCC) chairman Gina Cass-Gottlieb.

The changes are likely to be part of governments’ response to last year’s ACCC consultation on a mandatory code of conduct for designated digital platforms such as Google and Apple.

In its recommendations, the ACCC called for a code that addresses anti-competitive behaviors on platforms, such as self-preference, unfair trading relationships, and barriers to interoperability and the ability for consumers to switch services.

Apple and Google have been in the midst of high-profile battles over app store rules with Epic Games, the creator of the wildly popular Fortnite game. The game was booted by both app stores in August 2020 for bypassing the in-app purchase systems that Apple and Google force developers to use, which allows them to cut sales by up to 30%.

Epic Games is still engaged in litigation in Australia and the US over the ban, and the case isn’t expected to be heard in Australia until next year.

But the federal government is likely to try to introduce the new rules before then, with industry commenting on the proposed changes in the coming weeks.

Cass-Gottlieb said the cases abroad demonstrate how regulation is needed to achieve change. In South Korea, companies were forced by legislation to offer payment alternatives, while in the Netherlands, regulators could only get Apple to offer in-app payment alternatives for dating apps.

He said the two cases show companies can change the way they operate, but only if forced to do so by legislation.

We really need to take the step recommended by the ACCCs, which is to create a legislative framework where they can be specific to the most important digital platform service providers.

A spokesman for the assistant treasurer, Stephen Jones, would not confirm the timing of when the bill could be released but said the government was assessing its response to the recommendations.

The UK is trying to legislate new powers for the country’s competition regulator to govern digital platforms, and the EU’s Digital Markets Act will likely force Apple and Google to allow alternative payment methods outside app stores.

The Australian code of conduct would be the first taxi out of rank resulting from the digital platforms inquiry. The survey recently looked at whether companies such as Apple, Google and Meta and their creation of technology ecosystems have reduced the ability of smaller companies to compete.

National Australia Bank, for example, said in a presentation to the inquiry that the expansion of technology platforms into mobile wallets and the broader credit sector has given them a competitive edge because of the amount of data they already hold on clients.

Epic Games said in its presentation that opening up app stores to alternatives would reduce competitive damage.

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The digital platform services of Apple and Google face few, if any, competitive constraints in distributing mobile apps. As a result, mobile app developers have few, if any, viable alternatives for app distribution, the company said. This allows Apple and Google to unilaterally impose take-it-or-leave-it terms and costs as a condition of mobile app distribution.

Free TV Australia called for data separation rules, noting that Google’s advertising business had expanded out of control and the integration of the different advertising businesses within Google had given the company large market power.

Google in its response said that it does not consider its suite of products and services as a single ecosystem and said that what it offered competed with other companies that offer similar but different services on a product basis, such as Apple and Amazon in devices domestic.

Apple said its ecosystem was largely geared towards driving sales of its hardware devices and that its expansion into new areas, such as home devices, has improved competition for other companies as it has helped facilitate new and expanded and competition with and between third-party smart home devices and service providers.

The ACCC, meanwhile, continues its work on digital platforms. Last week it released a discussion paper on the largely undiscovered world of data brokerage where third parties harvest and sell a variety of data from social media, search engines, loyalty programs and others for applications such as audience profiling .

Cass-Gottlieb said he hopes the investigation sheds light on industry practices.

We believe very few people are aware of how data is collected or actually provided or sold to third party data brokers. Therefore, consumers are less likely to have opted-in to such data collection and use, and also less likely to even have the ability to object to or opt out of such data collection and use.

The issue journal is accepting comments until August 7.

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