Taking Article 6(12) DMA seriously: FRAND access prices for app stores

Jorge Padilla (Chair of International Board) and Kadu Prasad (Senior Vice President) authored an article for the Journal of European Competition Law & Practice. The article explores whether current approaches risk turning FRAND into a purely procedural exercise rather than an effective mechanism for ensuring contestability.

The views expressed in this article are the sole responsibility of the authors and cannot be attributed to Compass Lexecon or any other parties.

Abstract

The past 10 years have seen many disputes in a number of jurisdictions relating to competition concerns in app stores. Two issues lie at the heart of these disputes. First, whether consumers and app developers are de facto forced to rely upon the app stores of Google (Google Play Store) and Apple (Apple’s AppStore). Second, and relatedly, whether these app stores charge app developers unfair and unreasonably high fees for access, which at the moment can be as high as 30 per cent. The EU has attempted to address these issues through the Digital Markets Act (DMA),¹ Article 6(12) of which requires designated gatekeepers (i.e., Apple and Google) to, inter alia, unlock alternative distribution channels for app developers, and provide access on terms that are fair, reasonable, and nondiscriminatory (FRAND).

The focus of the gatekeepers’ compliance efforts and the Commission’s investigations is only the former; the latter, at least according to the gatekeepers, is assumed to hold already. Apple and Google have proposed changes to the access terms for their app stores pursuant to the DMA. Yet Google has not lowered its ad valorem commissions, which have been mandatory since 2022,² and Apple has lowered its ad valorem commissions, but at the same time it has added a per-unit technology fee.³ It is unclear whether the effective commission paid by app developers to Apple is greater or lower than before and, if the latter, how much lower. Apple’s nonconfidential summary of the compliance report does not address its compliance with 6(12). Google’s nonconfidential summary of the compliance report asserts that its fees are already FRAND, because they are (i) proportional to the value of its intermediation service, (ii) consistent with FRAND benchmarks, in particular the fees charged by nongatekeepers today (ie the ‘competitor benchmark’), and the fees charged prior to gatekeeping status (ie the ‘ex-ante benchmark’), and (iii) treat similarly situated developers in the same way.⁴