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The study, conducted by an advisory agency housed in the Commerce Department, found that the two Silicon Valley behemoths “have created unnecessary barriers and costs for app developers,” leading to “suboptimal” conditions for competitors. It’s part of a broader effort to crack down on corporate giants the administration believes are trampling on competitors.
“The marketplace for apps is largely controlled by two firms, Apple and Google. Their practices and policies hinder a competitive ecosystem,” Alan Davidson, head of the National Telecommunications and Information Administration (NTIA), told reporters during a call previewing the findings.
The report marks one of the Biden administration’s most detailed rebukes of the tech giants’ alleged stranglehold over the mobile app landscape, and it could shape future actions by Congress and antitrust enforcement agencies.
The advisory study took issue with how Google and Apple use pre-installed services, restrict users from downloading external apps and impose significant fees on developers to expand the companies’ grip on the market, calling for federal action to counteract it.
“Consumers, for the most part, can’t get apps outside of the app store model. … This means that innovators have very limited avenues for reaching consumers, and consumers have very limited choice or no choice about where to get their apps,” said Davidson, who previously led Google’s U.S. public policy team.
President Biden tasked the Commerce Department with conducting the study in his July 2021 executive order on competition, and to issue “recommendations for improving competition, reducing barriers to entry, and maximizing user benefit.”
To address those issues, the report recommended:
- Increasing funding for federal antitrust enforcers, which the agency said “have not kept pace with the challenges they face.”
- Limiting the extent to which companies can favor their own services, a practice known as self-preferencing, to “reduce the unfair advantages garnered from such practices.”
- Passing legislation or initiating agency rulemaking “to limit or prohibit discrimination and anticompetitive conduct as a complement to, and clarification of, existing antitrust authority.”
- Enacting measures to “to open up distribution of lawful apps” while “retaining appropriate latitude for legitimate privacy, security, and safety measures.”
- Limit or prohibit companies from requiring that consumers use their payment systems.
Google and Apple pushed back on the report’s characterizations of their practices.
“We disagree with how this report characterizes Android, which enables more choice and competition than any other mobile operating system," said Google spokeswoman Julie Tarallo McAlister. "NTIA recognizes the importance of interoperability, multiple app stores and sideloading, which Android’s open system already supports – all while ensuring privacy and security.”
“We appreciate the report acknowledges the importance of user privacy, data security and user convenience,” said Apple spokeswoman Marni Goldberg. “Nevertheless, we respectfully disagree with a number of conclusions reached in the report, which ignore the investments we make in innovation, privacy and security.”
While Davidson said the report was not an endorsement of any bill, the recommendations largely mirror bipartisan legislation that’s been debated on Capitol Hill, particularly the Open App Markets Act.
Bharat Ramamurti, deputy director of the White House’s National Economic Council, told reporters that the release of the report “strengthens the case for legislative action.”
“We’re highly committed to reform in this space and … we will work closely with Congress to see whatever is possible,” Ramamurti said.
Biden’s order called for the report to be released within a year, but the department missed that deadline by over six months, which could have political implications.
Lawmakers leading the push to rein in the tech giants’ alleged anti-competitive abuses urged congressional leadership to take up antitrust bills, including the app store legislation last Congress, arguing if Republicans took the House their window to pass it might close.
Now, with the House led by critics of those efforts, including Speaker Kevin McCarthy (R-Calif.), the proposals face a steeper climb to become law.
“I really couldn’t say whether this report would’ve made a difference, but I do think it does not deter us now, and we still believe the time is right for action,” Davidson said when I asked whether the administration believes it missed an opportunity by not releasing it last year.
Biden is slated to discuss the report and other administrative actions at a meeting of the White House’s competition council Wednesday.
Our top tabs
FTC asks judge to halt Meta’s VR deal as court weighs greenlighting
The Federal Trade Commission asked a judge to pause Meta’s deal to buy the virtual reality company Within Unlimited as the two sides wait for the court to decide its fate, Reuters reports.
“The agency asked for the court to order Meta to refrain from closing its deal for Within until 11:59 p.m. Pacific time on the first business day after the judge rules on whether the deal may go forward,” according to the report. “Or, the agency said in a court filing, the judge could extend the existing temporary restraining order for 7 days.”
The agency sued to block the acquisition by Facebook’s parent company in July, arguing it could lessen competition by giving the tech giant a foothold in the emerging VR market. The company said in response that the lawsuit sends a “chilling message” to innovators looking to grow their businesses.
The closely watched case is seen as a major test of the FTC’s more aggressive oversight of the tech sector under Chair Lina Khan, who antitrust advocates have hailed for bringing a new era of antitrust enforcement to the agency.
Amazon broke law by resisting warehouse unionization, judge rules
A National Labor Relations Board judge ruled that Amazon violated federal labor law by resisting unionization efforts at two of its facilities in New York City, Bloomberg News’s Robert Iafolla reports.
Administrative Law Judge Benjamin Green held Monday that Amazon illegally threatened to withhold wages if workers elected a union. The company also broke the law by removing a worker’s post on a digital message board inviting his colleagues to sign a petition at a union tent to make Juneteenth a paid holiday, the judge found,” according to the report.
Representatives for Amazon and the NLRB general counsel’s office couldn’t immediately comment, Bloomberg News reported. (Amazon founder Jeff Bezos owns The Washington Post.)
E.U. to Musk: Twitter must do more to comply with its content rules
Thierry Breton, the European commissioner for the internal market, on Tuesday warned Twitter owner Elon Musk that the company will need to take greater steps to comply with the bloc’s incoming content regulations, Reuters reports.
“We need to see more progress towards full compliance with the DSA. My team will follow closely the work made by Twitter and by all other online platforms,” Breton said after a video call with Musk, according to a readout of the session.
Musk has faced a wave of scrutiny for cutting its content moderation workforce and dialing back the company’s approach to curbing hate speech and misinformation. The moves have raised the specter of a potential clash with European officials, who last year approved sweeping new content obligations for internet platforms.
Inside the industry
- Solomon Messing has joined New York University’s Center for Social Media and Politics as a research associate professor.
- Rep. Ted Lieu (D-Calif.) speaks at a Washington Post live event about artificial intelligence policy at 11:00 a.m.
- The U.S. Chamber of Commerce will host its inaugural Digital Transformation Summit on Thursday at 10:00 a.m.
- The German Marshall Fund hosts an event on “The Foreign Policy of Technology” on Thursday at 10:30 a.m.
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This "puppy bus" in Alaska picks up these fur babies every day — and takes them on adventures. pic.twitter.com/hWfF3D6Zux— CBS News (@CBSNews) January 31, 2023
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