On 17 June 2021, ACT | The App Association continued the App Makers Tour of Europe. During our second stop in Germany, local app developers, policymakers, and industry representatives discussed the German app economy and the opportunities and challenges developers face today. Our panel also debated the Digital Markets Act (DMA) and how it could affect app developers and the broader tech ecosystem.

After some opening remarks and a warm welcome from the App Association’s founder and chairperson Mike Sax, we spoke to several policymakers. Moderated by Morgane Taylor, general manager of Europe for the App Association, the panel consisted of:

If you missed the event, read the recap or watch the 5 minute summary below. The full recording can be found here!

 

How could the Digital Markets Act (DMA) impact the app ecosystem, and how do we avoid unintended consequences?

Kicking off the discussion Andreas Schwab, Member of the European Parliament (MEP) and DMA rapporteur, stressed that the digital economy is driving innovation. He noted that the DMA should benefit everyone, stating that “the law should help make innovation flourish again and create fairness and competition in the marketplace”.

Thorsten Käseberg, Head of Unit for Competition Policy at the German Federal Ministry for Economic Affairs and Energy (BMWi), emphasised that apps and app stores are an integral part of the digital economy. “It’s particularly important in the context of the DMA that the app makers get their say,” he added. Käseberg also noted that clarifying the coordination between competition authorities at the EU level will be essential. Because competition law has constraints, it doesn’t always suffice in the modern age, Käseberg explained, making it necessary to create concrete rules and leverage existing resources in the Member States.

Karim Morsy, CEO of member company algoriddim, walked us through how app stores changed how app developers do business. Algoriddim was founded before the App Store even existed. “In the past, as a user you had to go through a whole process to install our app. Now, it’s a lot easier. You just hit the ‘get’ or ‘buy’ button to download our app, and that’s all the friction you have.” With the introduction of app stores, downloads skyrocketed, and algoriddim went from niche to mass market, Karim said. He also touched on the business perspective, noting that having a single place to distribute, promote, and update their app is incredibly valuable.

“[On the app stores] there’s minimal purchase friction and the distribution is unified, so we only have to push our updates in one place and it’s also good for security” – Karim Morsy

Rebekka Weiß, Head of Trust & Security at Bitkom, started off her remarks by saying that “if we regulate competition, there are almost always consequences that lawmakers did not intend when we drafted the law.” She stressed that by focussing only on a few specific companies and cases, the DMA risks damaging the whole, highly interconnected platform ecosystem. Therefore, the Commission should take a more tailored approach, clarify aspects like the regulatory dialogue and reflect the interdependencies of the platform ecosystem in the provisions of Articles 5 and 6, Weiß stated. Nonetheless, she emphasised that harmonising legislation in the single market is a good step to reduce legal fragmentation.

“The goal of the DMA is not only to regulate the large tech companies but also to create a fair game for everyone. If we regulate the large platforms, it will have consequences for them, but there might also be ripple effects that trickle down the digital ecosystem.” – Rebekka Weiß

While Anna Cavazzini, MEP and Chair of the Internal Market and Consumer Protection Committee, was not able to join the event live, she pre-recorded a video message for our participants. Cavazzini spoke about the opportunity to set tech policy standards according to European values for years to come. “We saw small companies didn’t have a chance in the digital market. So, with the upcoming legislation, we have the opportunity to harmonise our legislation and stay connected in our internal market. It’s an important goal to create legislation that works for business and consumers”, Cavazzini said.

What effect would some of the DMA provisions have on smaller app developers?

When asked about the consequences of mandating multiple app stores as part of the DMA, Karim Morsy, the CEO of algoriddim noted that “it would be a challenge for us.” Citing the Android operating system, Morsy explained how having multiple app stores does not add much from a business perspective. Rather, it just increases complexity and fragmentation because every app store has its own rules, he said. Highlighting intellectual property issues on app stores that don’t have a strict curation process, Morsy stated “people will just copy your intellectual property, and it’s almost like going back to the pre-app store era where we have to compete with our own product that’s just put on a different store.”

Lisa Figas, founder of AppTelemetry, voiced a similar sentiment, saying that “users want to have a simple solution – one place per device where they can find their apps.” Lisa also emphasised that multiple app stores could lead to a lot of work for developers. “Especially, for the very small development companies – sometimes a single person – this would cause a lot of harm.”

Reflecting on the discussion, MEP Schwab explained that while a centralised system might be the most convenient for users and small developers, it’s not competition. Schwab went on to emphasise that gatekeepers are not public utilities, meaning they can earn money without public oversight which creates a risk. “The argument that consumers like it [the app store ecosystem] and that it’s practical for developers, unfortunately, that’s not the point here,” Schwab said. However, he also acknowledged that gatekeepers have invested in their app stores to profit from them and that we cannot oblige them to offer everything for free. The big question remains what the fair amount is that gatekeepers are allowed to earn with their services, which Schwab said he addressed in his report. Considering the nexus between competition policy and the DMA, Schwab agreed with Mr Käseberg that the DMA needs to step into the gaps of national competition law rather than becoming a second competition law.

Responding to Schwab’s comment that competition should be possible between app stores, Mike Sax, founder and chairperson of the App Association, highlighted how the app stores have interacted with and responded to each other over time. You can read more about the introduction of innovations like in-app purchases, subscriptions and featuring apps in our app stores timeline.

“The Google Play Store and the App Store have been competing with each other all along and continue to do so. The pace of change and innovation is very high, so if you have two companies that are fiercely competing with each other, they’re not monopolies – they are competitors” – Mike Sax  

And with that, the event wrapped up. We thank all our panellists for making this a great event and look forward to the next stop on the App Makers Tour of Europe in France! Register here for the webinar on 13 July 2021.