Fair Competition in App Markets

Introduction

App markets—such as Apple’s App Store or Google Play—have significant economic importance and drive digital innovation. In 2021, the App Store alone facilitated transactions worth over EUR 511 Bn, which equals the GDP of Sweden.

Regulatory Scrutiny

However, app market operators have also attracted severe scrutiny from regulators due to their integrated gatekeeper structure: they operate a marketplace while also competing within them with their own apps. This gives app market operators an incentive for self-preferencing: they promote their own apps over third-party apps, consequently distorting competition and harming app innovation.

Policy Intervention Uncertainty

Uncertainty remains regarding how self-preferencing can effectively be counteracted with public policy interventions. Although legislators have advanced bills to restrict self-preferencing, including the Digital Markets Act, existing theoretical models are scant, make mixed predictions, and lack empirical validation. This uncertainty is problematic because app markets represent a complex node of the digital economy where regulatory interference—if not done “right”—can likewise harm innovation.

Project Objectives

This project will empirically evaluate which public-policy interventions against self-preferencing are effective in restoring app developers’ innovation incentives. It will:

1. Explain the effects, conditions, and mechanisms through which the interventions function and compare.
2. Permit a validation of existing theory.
3. Aid stakeholders and government agencies in developing appropriate strategies.

Methodology

To achieve this objective, this project will:

1. Conduct four in-depth quasi-experimental studies.
2. Exploit plausibly exogenous policy changes against self-preferencing.
3. Leverage unique time-series product-level data from mobile app markets.
4. Integrate the findings into a holistic understanding using measurement and analyses protocols.

Communication Plan

An extensive communication plan ensures the transfer of scientific expertise into public knowledge.