Biden administration’s new report on app stores calls on ‘Apple and Google to do better’

Biden administration's new report on app stores calls on 'Apple and Google to do better'

Opening another front in escalating tensions between Big Tech and Washington, the Biden administration released a new report Wednesday that outlined what it says are a series of anti-competitive practices within the country’s largest mobile app stores.

The report of the Department of Commerce’s National Telecommunications and Information Administration (NTIA) concluded that “the current mobile app ecosystem, and especially the current app store model, is detrimental to consumers and app developers,” said Alan Davidson. , Undersecretary of Commerce.

“We’re also asking Apple and Google to do better,” Davidson said.

The report outlines specific changes that officials would like to see from companies, but added that new laws and enforcement measures would also be needed to fully achieve the recommended changes. While Davidson’s agency has no regulatory power itself, the report was developed in consultation with officials at the Federal Trade Commission and the Justice Department’s Antitrust Division, both of whom could potentially advance these issues, Davidson said.

“A potential solution to many of the structural problems present in today’s app ecosystem is increased antitrust enforcement, both domestically and internationally,” the report says.

The App Store icon displayed on a phone screen is seen in this illustration photo taken in Krakow, Poland, on January 29, 2023. (Photo by Jakub Porzycki/NurPhoto via Getty Images)

The app store icon displayed on a phone screen is seen in this illustration photo. (Jakub Porzycki/NurPhoto via Getty Images)

Also on Wednesday, the Biden Administration announced a series of actions around “junk fees” by implementing new rules proposed by the Consumer Financial Protection Bureau targeting credit card companies. The administration is also urging congressional action around issues with online ticketing fees, airlines charging families to sit together and more.

The coordinated announcements from Washington on Wednesday came as part of President Biden’s Competition Council, an interagency group tasked with increasing competition in the US economy. They have a meeting scheduled in the East Room of the White House at 1:15 pm ET on Wednesday to further discuss the announcements.

In response to the report, Apple (AAPL) said the company welcomes a strong app economy.

“We appreciate that the report recognizes the importance of user privacy, data security and user convenience,” a spokesperson told Yahoo Finance. “However, we respectfully disagree with a number of conclusions reached in the report, which ignore the investments we make in innovation, privacy and security, all of which contribute to why users love iPhone and create a level playing field. so that small developers can compete on a secure and reliable platform.”

A Google spokeswoman (GOOG), Julie Tarallo McAlister, added: “We disagree with how this report characterizes Android, which allows for more choice and competition than any other mobile operating system.”

A call for new legislation from Congress

Wednesday’s 50-page report titled “Competition in the Mobile App Ecosystem” calls for several changes that could affect the way consumers interact with their phones for years to come.

A main focus in the report is on the apps that come pre-installed on new phones. Biden officials noted that web browsers and mapping software are areas where they say consumer choices are restricted. The report also calls on app store operators to stop favoring their own apps and proposes to ban the requirement that developers use an internal app store payment system.

United States President Joe Biden speaks during the third meeting of the White House Competition Council in the State Dining Room of the White House in Washington, DC on September 26, 2022. (Photo by Mandel NGAN/ AFP) (Photo by MANDEL NGAN/AFP via Getty Images)

President Joe Biden speaks during a White House Competition Council meeting at the White House in September. (MANDEL NGAN/AFP via Getty Images)

Furthermore, the report charges that the current App Store model is too difficult for consumers when it comes to getting third-party apps and charges that both Apple and Google create obstacles for developers through restrictions on how apps work.

As part of the report compilation process, both Apple and Google submitted comments to NTIA rejecting many aspects of the final report. In its presentation, Apple called its offering an “economic engine for app developers” that supports 20 million workers by connecting them with millions of customers around the world.

of Google presentation argues that the Android app store offers a more open experience than its counterparts and “transparency and control underpin our approach to privacy.”

The report says that the current system hurts consumers and leads to inflated prices and reduced innovation. In a recent opinion piece in the Wall Street Journal, President Biden I wrote about the general need to “bring more competition to the technology sector”.

But administration officials acknowledged that much of what they are proposing will not come to fruition without action by Congress.

In 2021, legislators introduced a bill which covers similar ground called the Open Markets for Applications Act. Those lawmakers accuse Apple and Google of using access control to stifle competition and have proposed a series of new rules to limit things like personal preferences. The bill was eventually shelved when the effort’s timeline ran out in 2022. amid lobbying from tech CEOs against that bill and other measure.

On Tuesday, Davidson declined to endorse any specific 2023 bill, but noted that “many of our recommendations would be answered and addressed by legislation such as the Open Marketplaces for Applications Act as introduced last year.”

The bipartisan effort has yet to be reintroduced during the current session of Congress.

Overall, White House Deputy Director for the National Economic Council Bharat Ramamurti stressed that the White House plans to press Congress to act, but it also has significant authority to act unilaterally, and more details could be announced in the coming months. .

Ben Werschkul is a Washington correspondent for Yahoo Finance.

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