Store market

Developers’ dynamics in the App Store market


  • App stores operate in a multidimensional market, which requires antitrust analysis to simultaneously consider the relationships of app stores with developers and end users; recent analyzes have potentially poorly characterized the two relationships.
  • Some have argued that iOS and Android consumers are separate markets due to differences in average spend per user, but averages mask the presence of spendthrift consumers on each operating system.
  • While developers have several alternatives to monetize and distribute their product, most arguments for regulation focus on selling digital goods and services through app stores.


App stores, especially those on smartphones, have come under continual scrutiny by policymakers and regulators. Much of the attention is focused on complaints that Apple and Google have created monopolies or a duopoly in the market for app stores and mobile operating systems and are abusing their market power to the detriment of developers. and consumers. A key argument is that these two companies have been able to establish monopolies because users and developers face “change costs” that prevent them from switching platforms. This overview will examine the claims of some policymakers and industry leaders regarding the mobile operating system and app store markets, as they assert that developers face a lack of competition and substitutability.

Defining the market: application developers and consumers

A central topic in the antitrust claims against Apple and Google is the definition of the market in which these companies compete. These platforms act as an “intermediary” to connect users and developers. The nature of this market adds another layer of complexity to the market definition process, as any market definition must take into account the relationships that exist between platforms, developers and consumers, and developers and consumers simultaneously, and not separately. Assessing the relevant market and characterizing it is an essential part of antitrust law enforcement, as policymakers, judges and regulators must be able to establish that a company is both a dominant player in the market and a leader. anti-competitive actions to advance anti-trust action.

Supporters of app store and operating system regulation have taken a closer look at platform-to-consumer dynamics, but there have been instances where the platform-developer relationship has been touched upon. Two prominent examples are The report by the House Judiciary Committee on app stores and the ongoing antitrust litigation between Epic Games and Apple. Both argue that developers are being harmed by the lack of competition and alternatives in terms of the operating system for which they can build apps and the app stores through which they can distribute them.

In Epic v. Apple, Epic has sought to define the market as the markets for iOS app distribution and integrated payment processing. This is a crucial point in Epic’s argument against Apple: it claims that iOS users are especially vital to developers, as the average iOS user spends double on in-app purchases compared to the average Android user, which makes iOS a market in its own right. . According to Epic, the success of the studios is strongly linked to their presence on iOS, as iOS users are more likely to spend their money on apps. This is an argument similar to those found in the federal and state proposals for the regulation of app stores, which are advanced on the assumption that iOS and Android are markets in their own right due to the alleged difficulties for them. users to change platform. In the decision in Epic v. Apple, the the judge defined the relevant market as digital mobile game transactions.

Is the iOS user base a different market?

As mentioned above, Epic has sought to characterize iOS users as a separate market, as they spend twice as much on their apps as Android users. Numerous studies support the statistics cited by Epic. According to Statistical, 66% of consumer spending on apps was on iOS, compared to 34% for Android. A investigation conducted by shopping platform Slickdeals reports that iOS users reported monthly tech spend was double the number of Android users. The survey also shows that the average salary of the iOS user is $ 26,000 higher than the average salary of the Android user.

However, these facts do not prove that these are different markets. There may be spendthrift consumers on both operating systems, but the Android average could also be slowed down by the presence of low spend users. This can be seen by looking at the costs of the device, as at the bottom of the scale the iPhone starts at $ 399 at the Manufacturer’s Suggested Retail Price (MSRP), while Android phones can be found for too. little as $ 59 MSRP. At the high end, flagship models of both brands have an MSRP of around $ 1,200. It is obvious that Apple is targeting a more homogeneous demographic with higher incomes. Meanwhile, Android is focusing on a more heterogeneous demographics with a wider income range, as it offers both low-cost and high-end devices. People interested in technology, who are more likely to spend money on in-app purchases, also tend to buy more expensive devices. These users are present on both operating systems.

Alternative options for developers to be successful

Arguments about app stores focus on spending on in-app purchases and the role of app store commission fees as they are supposed to hurt developers. This is at the heart of Epic Games’ argument, for example.

These arguments not only ignore whether these fees are at or even lower than the industry standard, but they also ignore how developers can opt for different monetization strategies that are not based on selling digital products.

While most digital transactions are subject to these commission fees, ads generally are not. This monetization strategy is often implemented by offering free or “freemium” gaming applications which are downloadable for free but which include paid content. In some cases, developers include both in-app purchases and ads to maximize their revenue. Outside of the gaming genre, it’s more common to see apps that rely exclusively on ads for their monetization instead of opting for a subscription or charging for downloads. This practice offers developers a free method of monetization, which is not subject to any type of commission from Apple or Google.

Even when focusing on the digital product sales and in-app purchases market, there are still several options for developers to compete in this market beyond the Google and Apple app stores. For example, in Android based systems, users can opt for other app stores such as Amazon Appstore or Samsung App Store. Developers can also choose to offer sideloading options, which allows them to bypass the controls and fees imposed by app stores. Nonetheless, this presents an increased security risk for users and is severely limited on iOS. Developers can also choose to offer their services on the web, without having to offer an app that would be subject to App Store guidelines.

Developers can also support competing devices such as tablets, game consoles, or personal computers. As noted above, the target demographic for in-app purchases is very likely to have another device as they tend to have higher income and interest in technology. When users switch to other devices, they get a robust offering made up of various operating systems and app stores, such as PlayStation Store, Xbox Store, or Roku Store. And while consumers can opt for another device of the same brand, they can also choose a competitor, especially if they feel that their smartphone’s brand may be too limited or restricted for its intended use.


While most discussions about app stores and mobile operating systems tend to focus on end users as the primary consumer, it’s also important to stress the role of developers. There have been instances where policymakers and industry insiders have drawn attention to defining this market for developers, but they have often done so with inaccurate metrics and ignoring alternative methods of monetization available.