by Zach Graves on (#5EJGJ)
Smartphone app store policies have come into focus recently, following a series of recent conflicts between app makers and app store operators (principally Apple and Google). These include the removal of conservative-oriented social media platforms Parler and Gab, and the ensuing debate about balancing free speech and harmful content. There have also been numerous conflicts over monetization, including disputes over transaction fees for digital goods and services (e.g. Epic Games), and privacy changes that affect third party advertisers (e.g. Facebook).With scrutiny of the tech industry at an all time high, the otherwise niche issue of app store policies has become an increasingly salient part of the broader debate over digital market competition, raising the specter of new government regulation. But what is the optimal level of openness in a competitive app ecosystem, and how does public policy help achieve it? These are harder questions to answer than they seem—involving deep technical, economic, and legal issues.A Tale of Two Smartphone Operating SystemsAccording to Statcounter, the global mobile operating system market is dominated by Google’s Android operating system (72% market share), followed by Apple’s iOS (27% market share). Despite having a substantially smaller user base, the Apple App Store earns substantially more direct revenue than the Google Play Store. But this is misleading at first glance.First, there are important demographic differences. iPhone owners are more concentrated in developed nations, and even in those countries tend to be more affluent and spend more on apps. Their business models are also different. Unlike Apple, which has limited advertising offerings, Google earns substantial revenues through mobile advertising, and even pays Apple billions each year for the privilege to be its default search engine to expand the revenues it can capture. They are also designed in fundamentally different ways. Whereas iOS is a proprietary closed system, Android is (mostly) open source. Notably, there are versions of Android without Google Play or other Google services, particularly in mainland China where it doesn’t operate. Apple, on the other hand, operates the App Store on all iOS devices; and unlike Google, does business in the lucrative mainland China market.As a result of these different architectures, a conspicuous difference between Android and iOS is that the former allows the installation of apps outside of its Play Store. This can be either through a pre-installed third party app store that ships with the device (e.g. Samsung’s Galaxy Store or the Amazon Appstore), or direct installation of apps or even other app stores, called “sideloading.” Circumventing the Play Store also means that developers can take payments without cutting Google in, typically 30%. Meanwhile, Apple requires users to go through its App Store to download apps, where it takes a similar cut.Policymakers RespondGrasping onto this difference, and facing pressure from lobbyists, policymakers in multiple states have proposed new legislation that would force Apple to redesign their operating system to allow circumventing both the App Store and In-App Purchase system (see similar bills in GA, ND, HI, AZ). Notably, a similar provision also exists in the European Commission’s proposed Digital Markets Act.In theory, this sounds like a good idea. In the wake of recent controversies, many in Silicon Valley have been looking towards decentralization as the answer. Indeed, systems with more openness and interoperability tend to foster innovation and competition, and give users more freedom. The ability to install apps directly could also be an essential workaround when companies remove controversial apps, particularly where they are pressured to do so by activists or governments.However, there are some good reasons to be wary of rushing to pass such a mandate, both as a substantial fix for digital market competition, and as a precedent for local governments dictating or overseeing software designs—something they’re not known to be particularly competent in.Trade Offs of a Sideloading Mandate: Cybersecurity and PrivacySuddenly forcing iOS to allow unvetted apps could introduce a flood of serious cybersecurity vulnerabilities, facilitating everything from spyware to ransomware to identify theft. Such an unanticipated requirement could pose a serious challenge to developers, potentially necessitating years of new work and investment.A 2019 threat intelligence report from Nokia observed that Android devices were fifty times more likely to be infected than iOS, with the “vast majority” of malware distributed through trojanized sideloaded applications. Because of this risk, Android takes measures to discourage sideloading through user interface mechanisms. Google’s Advanced Protection Program also blocks sideloaded apps for this reason.Because Android is a more open system than iOS, its privacy and security features are constructed differently. While both operating systems have some form of automated threat detection, app containerization, and other features to limit an app’s access to sensitive systems, these are architected based on different assumptions.For Apple, a closed-system approach is at the heart of its strategy for iOS. If Apple engineers could no longer count on vetting during the app review process, they may be forced to build new redundancies from scratch, or even redesign major parts of the operating system. Because iOS isn’t open source like Android, it’s hard to tell how much of an architectural challenge this will be.Apple’s preference for closed systems can be traced to Steve Jobs’ philosophy of end-to-end control of hardware and software, and lack of patience for consumer tinkering, going all the way back to the first Macintosh computer. In 2007, around the launch of the first iPhone, Steve Jobs described applying this thinking to iOS (then “iPhone OS”) in an interview with the New York Times: