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Microsoft Store on Windows welcomes third-party app stores, building pressure on Apple to do the same

Microsoft’s decision comes at a time when Google and Apple are facing antitrust scrutiny for their existing app store policies.

Source: Microsoft

Microsoft is opening the Microsoft Store on Windows to third-party app stores, the company announced in a blog post on September 28. Amazon and Epic Games will be the first to bring their app stores on Microsoft Store, the company said.

Opening up to third-party app stores on Windows does not have the same large-scale implication as it does on iOS because it has always been possible to download software from external sources on Windows, and this is in fact how most users download. Nevertheless, now that two major platforms, Microsoft and Google, allow third-party app stores, the pressure on Apple to do the same increases.

An open store for an open platform

“Our commitment to being an ‘open store for an open platform’ isn’t just about the various technical underpinnings of how apps are built,” Microsoft said, “Just like any other app, third-party storefront apps will have a product detail page that can be found via search or by browsing – so that users can easily find and install it with the same confidence as any other app in the Microsoft Store on Windows.”

Microsoft Store on Windows also does not require app developers to share revenue with Microsoft when apps use their own in-app payment systems, which is different from the mandatory 30 percent commission that both Apple App Store and Google Play Store charge.

Microsoft Store, which was first unveiled in June, is slated to launch alongside Windows 11 on October 5 and will later come to Windows 10 users.

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Epic’s unsuccessful attempt in getting Apple to allow third-party app stores

Back in August 2020, Epic Games filed a lawsuit against Apple saying that it aimed to bring an end to Apple’s “unfair and anticompetitive actions” in two distinct, multibillion-dollar markets: (i) the iOS App Distribution Market, and (ii) the iOS In-App Payment Processing Market. The lawsuit had demanded Apple to allow third-party app stores and in-app payment systems among other things.

In a verdict delivered on September 14, a US judge ruled that Apple must allow iOS apps to direct users to purchasing mechanisms other than the one offered by the company. However, the judge also ruled that Apple does not have to allow third-party app stores or side-loading of apps. Apple has always maintained that such a move will compromise the privacy and security of iOS devices and the judge found the argument convincing. Epic has filed an appeal to this decision.

Google’s dual-policies around third-party app stores

Google’s public policy has always been that they welcome third-party app stores on Android. Although you cannot download these off the Play Store, smartphone manufacturers like Huawei and Samsung can pre-install their own app stores and users can download APK files of other stores like Amazon Appstore. “Choice has always been a core tenet of Android, and it’s why consumers have always had control over which apps they use, be it their keyboard, messaging app, phone dialer, or app store,” Google said in a blog post in September last year. In the post, Google even promised to make using third-party app stores easier on the upcoming Android 12.

However, the recently unredacted Epic Games lawsuit against Google reveals that the company actually discourages third-party app stores behind the scenes by putting pressure on phone makers (OEMs) to make Play Store the only app marketplace that shipped with the phone and offering significant financial incentives to those that do so, and withholding those benefits from those that do not.

Will the Microsoft Store give Apple and Google a defense in antitrust investigations?

Windows has a nearly 80 percent market share in the desktop and laptop operating system market. Of this 80 percent, Windows 10, which will get Microsoft Store in the coming months, has a 78 percent market share. This would make Microsoft Store the dominant app store in the desktop and laptop app distribution market and one of the most dominant app stores when taking into consideration desktops, laptops, tablets, and smartphones. This potentially allows Google and Apple to argue that the Android Play Store and iOS App Store are not the most dominant in the app distribution market. Antitrust watchdogs generally require dominance to first be established before investigating abuse of dominance. However, investigators might choose to go with narrower definitions of markets such as the market of app distribution on Android or the market of app distribution on iOS, in which case, the entry of Microsoft Store will not affect ongoing investigations in any way.

How are governments dealing with app store regulations?

India: In India, both Google and Apple are facing regulatory scrutiny over their app stores. While the Competition Commission of India ordered a detailed investigation into Google Play Store last November, it is currently reviewing an antitrust complaint filed against Apple App Store last month.

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US: On August 11, US lawmakers introduced a new bill titled Open App Markets Act that proposes:

  • Operating systems must allow third-party app stores
  • Developers must be allowed to choose their choice of in-app payment system
  • Pricing for various app stores or in-app payment systems can be determined by developers
  • Developers can freely communicate pricing offers with users
  • Google and Apple cannot use non-public data to build competing apps
  • No self-preferencing in app stores
  • Third-party developers must be provided with the same access to developer tools

EU and UK: The European Union has launched an investigation into Apple App Store following a complaint from Spotify and the United Kingdom has launched a broad investigation into Google and Apple’s effective duopoly over the supply of operating systems (iOS and Android), app stores (App Store and Play Store), and web browsers (Safari and Chrome). Both investigations are ongoing.

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