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Apple, Google app store practices stymie competition, Japan trade report says

According to a recent report by Japan's Ministry of Economy, Trade and Industry, limitations applied to developers marketing their wares through proprietary app stores run by Apple and Google are a hindrance to smartphone app industry competition.


Apple Store in Omotesando, Tokyo.


The ministry's report on app store practices includes data from a survey of app developers conducted in collaboration with the Japan Fair Trade Commission, reports Nikkei. Results show Apple, Google and other brands with smartphone app store platforms undermine competition by asserting control over their respective distribution channels.

While not in violation of Japan's anti-monopoly law, practices like restricting acceptable payment methods and limiting app pricing to preset tiers inhibits competition, the ministry report found. Apple's 30-percent levy on all iTunes and App Store sales —commonly referred to as the "Apple tax" —was mentioned by name, with some participants in the study group arguing the practice is an abuse of Japan's laws.

Pricing freedom is another developer gripe. In Japan, Apple mandates app prices be rounded to the nearest ten yen denomination, a policy enacted to simplify the purchasing experience for consumers —and likely bookkeeping for accountants. The company applies identical restrictions to App Stores in the U.S. and other international locales.

Finally, the ministry report questions Apple's refund practices. As it stands, when a user insists on a refund, the app developer must stump not only for its take of the original sale, but also the 30 percent commission taken out by Apple.

Japan's FTC plans to investigate the issue and "may choose to conduct on-site inspections if there is sufficient suspicion of regulation breach," according to one unnamed official.

Apple jumpstarted the app economy with its launch of the App Store for iPhone in 2008. Preloaded on every iOS device since then, the store has become a vital piece of the iOS experience. Though Apple benefits from the ability to offer its customers a vast universe of apps, the developer community was arguably most impacted by the App Store's introduction.

With the App Store, independent developers have equal footing with large studios and even established companies, all of whom are marketing their wares to millions of captive users.

Coincidentally, Apple last month published a webpage touting the company's contributions to the Japanese economy, including revenue generation and job creation related to the App Store ecosystem. Specifically, some $9.6 billion was paid out to 532,000 Japanese developers in 2015 alone.