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Apr 22 -- The National Telecommunications and Information Administration (NTIA), U.S. Department of Commerce, requests comments on competition in the mobile application ecosystem. The data gathered through this process will be used to inform the Biden-Harris Administration's competition agenda, including, but not limited to, the Department of Commerce's work developing a report to submit to the Chair of the White House Competition Council regarding the mobile application ecosystem. Written comments must be received on or before 11:59 p.m. Eastern Time on May 23, 2022.

On July 9, 2021, the President signed Executive Order 14036 on Promoting Competition in the American Economy (E.O.). As the E.O. explains, “[t]he American information technology sector has long been an engine of innovation and growth, but today a small number of dominant internet platforms use their power to exclude market entrants, to extract monopoly profits, and to gather intimate personal information that they can exploit for their own advantage. Too many small businesses across the economy depend on those platforms and a few online marketplaces for their survival.”

The E.O. includes numerous initiatives to address the problem of dominant tech platforms undermining competition and reducing innovation. Included among them is a directive to the Secretary of Commerce to, in consultation with the Attorney General and the Chair of the Federal Trade Commission (FTC), conduct a study—including by conducting an open and transparent stakeholder consultation process—of the mobile application (app) ecosystem, and submit a report to the Chair of the White House Competition Council, regarding findings and recommendations for improving competition, reducing barriers to entry, and maximizing user benefit with respect to the ecosystem.

By one account, the app economy was valued at $1.7 trillion in 2020, and over 300,000 U.S. companies work in this sector, employing more than 5.9 million Americans. The two main app stores are operated by companies with headquarters in the United States. Global consumer spending in this ecosystem is also growing rapidly, estimated by some as nearly doubling from 2016 to 2020, to reach $120 billion. Entire new sectors of industries have been spawned as a result of app innovation, such as ride sharing, or have experienced technical advancement, such as smart home appliances. The app economy is becoming a fundamental way that Americans interact with their environment. Thus, it is critical that this market be robust, open, innovative, and secure—and without barriers to entry and growth.

On behalf of the Department, and in furtherance of this requirement, NTIA is requesting comments from the public on competition in the ecosystem in which mobile apps exist. The goal is to support the Administration's efforts to promote competition in the tech sector and to inform NTIA's analysis of ways to support healthy competition in the market for mobile apps, in particular.

NTIA is the executive branch agency that is principally responsible by law for advising the President on telecommunications and information policy. NTIA studies and develops policy advice for the Administration related to communications and the internet, including to promote the efficient and effective use of telecommunications and information resources. In that role, NTIA regularly works on national policies on the communications infrastructure. Additionally, the Department more broadly is charged with promoting job creation and economic growth.

This study is aimed at examining unique aspects of competition involving apps on mobile phones and tablets. In doing so, we recognize that the general mobile ecosystem is comprised of a number of distinct types of entities and interrelated markets. Mobile service providers play a role in a range of relevant aspects, including broadband service and determining which apps are pre-loaded or set as defaults. At the same time, functionality and app distribution are also dependent upon operating systems and app stores, which function as sub-ecosystems. For this study, we are seeking to look beyond the general to examine particular environments in which different types of apps and associated businesses operate. For example, there might be different opportunities and barriers that distinguish some types of apps, such as those used for medical purposes, payments, streaming, social-networks, messaging, or apps that connect to other items by virtual or physical connections (e.g., to tracking or Internet-of-Things devices). Other app ecosystems that exist or extend beyond mobile, such as those for gaming consoles and personal computers, might be relevant to our review, but only to the extent that analysis of them offers clear facts for comparison.

The Executive Order specifically requires consultation on the NTIA study with the Department of Justice (DOJ) and the FTC, who are the primary enforcers of competition law at the federal level. Law enforcement agencies have been assessing the evolving digital markets in which apps operate. Along with actions by the states, private actors, the courts, and legislators, such legal examinations are shaping the mobile app ecosystem and have helped elevate the discussion of competition barriers, as well as proposals to facilitate greater competition in the app marketplace. These actions have also been tangibly altering the ecosystem. For example, the roles of the two major app stores, including the commission fees they charge, and restrictions they place on how apps interact with consumers, as well as technical barriers, have been impacted by decisions by lawmakers across the globe.

Another area of inquiry has centered around the potential for abuse of commercial data obtained by competitors, to the detriment of privacy and competition. In addition, there are concerns about whether companies interfere with the creation of innovative new products and services by limiting the ability of mobile apps and their associated products and services from accessing a particular set or network of customers. While this study will not include a legal assessment of whether certain practices violate the law, we are interested in learning of rules and practices that make it harder to open and run businesses or that harm innovation.

In addition to competition agencies, other agencies have relevant roles in overseeing specific types of apps as part of a broader ecosystem. For example, the Federal Communications Commission (FCC) also oversees the communications marketplace, including aspects of competition between mobile service providers, and has for years assessed the competitive elements of the ecosystem. The Consumer Financial Protection Bureau (CFPB) has also been examining payment ecosystems.

In the study, NTIA will take a holistic approach to analyzing the mobile app ecosystem with the goal of identifying recommendations to improve competition, reduce barriers to entry, and maximize user benefit with respect to the ecosystem. In addition to fundamentals about the structure of the ecosystem, including how the apps are distributed, there are many issues that might be relevant to developers and app users. For example, common occurrences of fraud—or perceptions of it—might impact whether consumers download apps and businesses are comfortable offering their products through specific distribution channels. While there are many issue areas and markets that could be brought into this study, the scope will only address topics most relevant to the mobile app ecosystem.

Given the incredible promise that the app system holds, NTIA is also interested in learning what app users need to maximize user benefit, particularly users who use apps in their daily life or for business operations. There is limited information on how people use apps. For example, some sources estimate that each mobile device has 20-46 apps loaded at any time, but there is limited comparable data to confirm whether that is an accurate or optimal number to foster innovation.

Topic areas that the agency will use to address mobile app ecosystem competition in the forthcoming report will be informed by input from public comment. Possible topics are outlined below.

Through this Request for Comment, NTIA is seeking public input to further develop its understanding of competition within the mobile app ecosystem. NTIA is looking for concrete and specific information as to what app developers, organizations, and device (i.e., phones; tablets) users experience, and any potential challenges or barriers that limit app distribution or user adoption. To the extent commenters choose to respond to the specific questions asked, responses should generally follow the structure below and note the number corresponding to the question. As detailed below, through this Request for Comment, NTIA is seeking information on the state of competition, the factors affecting app development and distribution, and active ways to increase competition, through government or private sector action.

Definitions and Statistics (Q1-5)
Software and Support for Developers (Q6-12)
Avenues for App Distribution (Q13-19)
App Users (Q20-23)
Other Factors (Q24-26)
Potential Actions To Increase Competition (Q27-28)
FRN seeking comments: https://www.federalregister.gov/d/2022-08573

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