Rumor has it the Open App Markets Act (OAMA) could make a comeback in Congress. Its supporters posit that large tech companies, such as Apple and Alphabet, are throttling competition and innovation. Yet these arguments run contrary to objective evidence. And the stakes are high—not only does OAMA-like legislation risk undoing Congressional efforts to address the TikTok challenges, it makes the critical mistake of abandoning America’s historical commitment to innovation and markets.
Proposed by Sen. Richard Blumenthal (D-CT) in the last Congress, OAMA immediately ran into legislative trouble. The Senate version made it out of committee but did not reach a floor vote. The House version failed more starkly—stalling out in committee.
The bill ran into trouble because the arguments used by supporters were unpersuasive, and the legislation itself missed the mark. The Senate sponsors argued that the OAMA would “tear down coercive anticompetitive walls in the app economy, giving consumers more choices and smaller startup tech companies a fighting chance.” The House sponsors argued that “Google and Apple have had a stranglehold on app developers” and they are “stifling competition and strangling consumer choice.”
But these claims are unsupported by even anecdotal evidence. Smartphone use is surging: The number of US smartphone users grew 25 percent from 2016 to 2021. Now 96 percent of Americans aged 18 to 29 years own a smartphone. These flourishing sales are antithetical to supposed market power, which suppresses production.
And the prosperity extends into the app markets. By one count, there are nearly 1.9 million apps and over 790,000 app publishers in the Apple App Store. There are over 2.4 million apps in the Google Play Store; evidently, there is no shortage of customer choice.
Further, app revenue grew 6.1 percent annually from 2018 to 2023, the number of app employees is growing, app profits grew 63.1 percent from 2018 to 2023, and the average app profit margin was a healthy 14.6 percent last year. These are not the indicators of a strangled industry.
OAMA supporters rely heavily on a 2020 report that emphasizes forceful accusations from Big Tech adversaries and journalists, and ignores numerous objective studies that counter the report’s claims. As antitrust scholar Daniel Sokol explained:
If we look at the empirical literature on online platforms since the year 2000 [in 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.] … [There is only a] single page out of the 375-page analysis that actually mentions … that platforms may be procompetitive. One out of 375 pages.
My recent study with Jakub Tecza and Peter Wang illustrates what is at stake: Apple’s App Store and app creation practices stimulate developers to create more apps, update apps more often, and serve more consumers. These are not the marks of a monopolistic overlord crushing innovation; they suggest a thriving ecosystem where competition benefits consumers, developers, and Apple.
Google’s Play Store practices, meanwhile, appear to elicit neutral responses from app developers, implying that Google neither harms nor helps its rivals. Sadly, OAMA and the European Union’s recent Digital Markets Act (DMA) press Apple’s app practices to be more like Google’s, which will depress competition and consumer choice for Apple users.
Beyond the marketplace, my AEI colleague Shane Tews has explained that the OAMA and DMA pose significant cybersecurity risks. Removing vetting processes could open floodgates to malware, making consumers and national networks vulnerable. Additionally, by entangling tech companies in bureaucratic red tape, the OAMA could hamper the rapid response needed to defend against cyber threats.
While the intent to safeguard anticompetitive conduct is commendable, the OAMA misses that mark. It would curtail technological advancement, diminish the value America’s tech companies create for consumers and investors, and damage national security.
In an era of escalating cyber and geopolitical threats, it is imprudent to weaken America’s tradition of permissionless innovation, consumer-driven markets, and competition for investment. Instead of creating a government-led industry, we should foster an environment that continues to champion innovation, security, and, above all, the American spirit of enterprise.