Microsoft Pushes for More Competitive App Stores... but Where is the Line Drawn?

     Following last week’s release of House lawmakers’ report accusing the four largest tech companies (Apple, Amazon, Facebook, and Google) of anticompetitive practices, Microsoft has publicly committed to 10 principles for how it will operate its app store. As part of these 10 guiding statements, Microsoft promises not to block competing apps from its Windows app store or block access to third-party app stores, and to only charge “reasonable” fees to developers and not penalize them for the types of payment systems they use for in-app purchases. These statements align with the ideas championed by the Coalition for App Fairness, a group of developers (including Spotify and Epic Games) that is trying to take on Apple’s anticompetitive practices and high fees (30%) charged to developers. While these principles do not represent a significant policy change for Microsoft, which has a more open app store than Apple, it does draw attention to the different ways that tech giants can model their app store businesses and, perhaps, highlight the more ethical versus less ethical ways to run an app store.

    That said, Microsoft has explained that these core principles will not apply to their Xbox gaming systems, which they argue are sold for little/no profit and are only profitable because of the game purchases (systems that run Microsoft Windows or Apple iOS, on the other hand, do not depend on app purchases to be profitable since the technology itself is sold with high margins). While this makes sense from a business perspective, in many ways it seems like a way to rationalize business choices that have already been made. Microsoft said that their 10 app store principles were designed to “to promote choice, ensure fairness, and promote innovation”—why should choice, fairness, and innovation go out the window because the company has chosen a different pricing model for one of its products? If Apple significantly lowered the price of its iPhone, would the scrutiny around its app store practices go away since Apple would be more heavily dependent on app revenue? While I am not disagreeing with Microsoft’s choice to have a more open Windows app store compared to its Xbox systems, perhaps the pressure it is putting on Apple to have a more open app store is unwarranted—after all, it’s part of Apple’s business model.

Sources: https://www.nytimes.com/2020/10/08/technology/microsoft-mobile-applications-competition.html?auth=login-email&login=email , https://www.fool.com/investing/2020/10/09/microsoft-takes-shots-at-apple-in-new-app-store-pr/ , https://9to5mac.com/2020/09/24/coalition-for-app-fairness/