Rumor has it that sponsors of the Open App Markets Act (OAMA) are rushing the legislation through Congress before the end of the current session. I won’t speculate on why the sponsors are in a hurry. But I will challenge their claims that the smartphone and app industries need a regulatory rescue, even if the legislation provided that. It does not.

The sponsors claim that Apple and Alphabet—the two premier providers of smartphone platforms—repress competition from startup app companies and harm consumers by discouraging innovation and artificially raising prices. Targeting Apple, the sponsors assert that the company has stifled competition by preventing access to third-party app stores on iPhones, requiring app developers to use Apple’s payment system and “penaliz[ing] app developers for telling users about discounted offers.”

These claims are hard to support with even anecdotal evidence. The smartphone industry is performing so well that the number of US smartphone users grew 25 percent from 2016 to 2021, and now 85 percent of US adults use smartphones. There are about seven million apps on Apple and Android platforms. There are nearly 6,000 app developers in the US—nearly double the number in 2016—and their business grew 12.6 percent in 2022, up from an annualized growth rate of 10.5 percent since 2017.

This is hardly a suppressed industry. So what evidence do the sponsors have for their claims? They lean on general assertions from Big Tech critics and allegations made in the 2020 majority staff report on Big Tech for the Committee on the Judiciary’s House Subcommittee on Antitrust, Commercial, and Administrative Law.

How solid is this report? As I explained in earlier blogs, the report’s evidence consisted of news articles, a single study that was critical of merger policy (while ignoring research papers that were critical of that study), and submissions and testimonies by academics and rivals of Big Tech companies, some of which were never made public.

The report ignored hundreds of top academic studies that effectively disproved the majority staff report’s assertions. As Professor Daniel Sokol explained during a recent AEI event:

If we look at the empirical literature on online platforms since the year 2000 [focusing on the] top journals for business schools . . . there are roughly 250 empirical papers dealing with platforms and different types of platforms [and] not a single one of those papers is cited [in the report].

He went on to explain: “[There is only a] single page out of the 375-page analysis that actually mentions—and this goes to Maureen [Ohlhausen]’s point—that platforms may be procompetitive. One out of 375 pages.”

Given the significance of the sponsors’ assertions about Apple and Alphabet hindering competition in app markets, economists Jakub Tecza, Peter Wang, and I have undertaken a study of how third-party app developers fare on the Apple and Android platforms. We won’t be ready to release the study until next month, but I summarize our empirical findings below.

Using over seven years of data on app downloads, market entry, and innovations, we have found evidence that Apple has positive effects on app developers and consumers in the US. For example, when Apple introduces an app of its own, other app developers in that same category update their apps, and consumer downloads of third-party apps in that category increase 7 percent on average. Moreover, the number of apps newly introduced in that category also increases.

With Apple’s market conduct apparently stimulating app creation, more app updates, and more consumer downloads, it is hard to justify the OAMA sponsors’ claims that Apple is harming competition.

We find different results for Alphabet’s Google Play Store. We find evidence consistent with consumers switching to an Alphabet app when it is introduced. But otherwise, we find third-party developers largely ambivalent to Alphabet’s market conduct: They do not change their rates of market entry, new app development, or updating apps. So much for Alphabet harming competition.

One implication of our research is that if the OAMA outlaws the platform features that consumers are demonstrating they like, one can expect fewer apps of the kinds consumers prefer, fewer qualified app developers, less app innovation, and less app consumption.

On top of that, my colleague Shane Tews has repeatedly warned of the cybersecurity dangers of removing the vetting processes currently in place. Such a move would flood the marketplace with malware, introducing more vulnerabilities to our networks.

Our elected officials would serve consumers and the American economy well by continuing to let consumers determine platform and app developer success and not imposing regulations founded on faulty assertions.

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