COMMENT: ICLE Experts Available to Discuss App Store Competition

PORTLAND, Ore. (April 21, 2021) — As the Senate Judiciary Committee’s Subcommittee on Competition Policy, Antitrust, and Consumer Rights prepares to examine competition in digital app stores during an April 21 hearing, the International Center for Law & Economics has published a short explainer on the recent federal antitrust lawsuit filed by Epic Games against Apple Inc. over certain App Store rules. 

In the suit, Epic—publisher of Fortnite and the Unreal series—accuses Apple of anti-competitive behavior for barring Epic from offering alternative payment-processing options to iOS customers for in-game purchases. Apple counter-sued for breach of contract and subsequently delisted Fortnite from the App Store. Epic also filed a similar lawsuit against Google after Fortnite was removed from the Google Play store. 

But while Epic and certain other large app developers might benefit from avoiding commission fees charged by Apple and other online platforms, ICLE Senior Fellow Dirk Auer and President Geoffrey Manne explain that reduced revenue could mean that companies like Apple have less incentive to invest in their platforms, at the expense of consumers.

“Epic’s proposals would allow large developers and rival payment processors to get the benefit of Apple’s investments in iOS and the App Store without paying for them,” Auer and Manne write. “It could also undermine other online platforms that rely on commissions to earn a positive return on their upfront investments. This could shrink investments in platform creation and upkeep, hurting users and leading to worse platforms overall.”

The ICLE tl;dr explainer “Apple v. Epic: The Value of Closed Systems” is available here

For more commentary on competition in the digital app store market, see Auer’s earlier piece on the Epic lawsuit at the Truth on the Market website. Also on Truth on the Market, ICLE Associate Director Legal Research Ben Sperry looked at whether self-preferencing by Apple in the App Store harmed consumers. Manne wrote in the journal Concurrences about why actions to stop platform self-preferencing are misguided. And in an article published in the Nebraska Law Review, Manne and ICLE Director of Innovation Policy Kristian Stout examined the nature of the relationship between app stores, consumers, and app developers in the context of the U.S. Supreme Court’s 2019 decision in Apple v. Pepper

Media interested in interviewing or booking Geoffrey Manne to discuss app store competition may reach him at [email protected] or (503) 780-8515; Dirk Auer is available at [email protected] or +32-47-293-8401.