Regular readers of this blog and listeners of ACT | The App Association’s podcast, Tech Swamp, are familiar with the DC rumblings around antitrust felt over the last Congress. Well, those rumblings are now reaching the magnitude of a minor earthquake; if the tremors before were only detectable on a seismograph, you certainly hear the fine china shaking in the cabinets now. Unfortunately, the impending tectonic (“tech”-tonic?) shifts are unlikely to help—and would actually hurt—small app companies. Though many are unsatisfied with the status quo, the bureaucratic expansion that huge competitors like Spotify and Epic are proposing would worsen conditions for the smallest app companies like App Association members.

Both the House and Senate subcommittees with antitrust jurisdiction have closely scrutinized antitrust law and potential expansion of it over the past year or so. For example, Senate Judiciary Committee’s Subcommittee on Competition Policy, Antitrust, and Consumer Rights Chairwoman Amy Klobuchar (D-MN) introduced legislation in February to address anticompetitive conduct and mergers. The Subcommittee also held one hearing on “Competition Policy for the Twenty-First Century: The Case for Antitrust Reform” and Chairwoman Klobuchar is also releasing a book on competition policy called Antitrust: Taking on Monopoly Power from the Gilded Age to the Digital Age on April 27th.

Tomorrow, they are holding a hearing on “Antitrust Applied: Examining Competition in App Stores,” where they will hear from software platform operators Apple and Google, and their most vocal complainants, Tile, Spotify, and Match Group. Politico’s coverage provides a “reality check” in that these weighty witnesses are “not exactly the little guys.” In a nutshell, this describes why the App Association opposes their calls for antitrust expansion to address their specific grievances. We submitted a statement for the record elaborating on these views (linked here). Here are some key takeaways:

  1. Competition is Alive and Well in the Markets Relevant to App Stores

On the consumer-facing side of the market, the major app stores experience competition from other platforms, especially in narrower markets like gaming, and they also compete vigorously with each other. The relatively low switching costs for consumers (which critics wrongly refer to as “prohibitive”) help facilitate this competitive dynamic and benefit consumers.

On the developer services side of the market, the Google Play store and the App Store compete vigorously for developers and developer services. This history of the app stores illuminates a pattern of competitive behavior between app stores, especially for developers. And similar to the consumer-facing side of the market, developers often have options beyond the main app stores for distribution, especially if they are either game developers or larger companies with the resources to carve out distribution paths without the help of software platforms.

  1. Developers are Pushing for More From the Platforms

Software platforms have historically responded to the needs of developers and consumer demands as those forces have evolved. Right now, app companies are pushing for several things from software platforms that government intervention would likely undermine. Specifically, app companies are seeking:

  • Expedient removal of scam apps, fake reviews, and fraudulent actors.
  • Better security.
  • Better privacy.
  • More investment in developer relations.

  1. Antitrust Intervention to Limit Software Platform Functions Would Harm Small App Companies

In the software platform context, policymakers are considering a variety of structural or quasi-structural remedies from a Glass-Steagall-like separation of lines of business to prohibitions on specific kinds of exclusivity. These proposals generally would make it harder for platforms to make the improvements App Association members are seeking; advantage much larger competitors like Spotify and Epic to the detriment of App Association members; and likely increase barriers to entry and growth for small app companies. In summary, our member companies urge policymakers to think about how resolving business conflicts between well-resourced rivals with antitrust expansion would negatively impact the smallest innovative companies on the app stores, as well as their clients and consumers.