Apple and Google set the rules, collect the fees, and compete as makers themselves
In the ongoing tension between concentrated digital power and open markets, the Biden administration formally named Apple and Google as architects of app store ecosystems that disadvantage developers, inflate costs, and suppress competition. The Commerce Department's report, released alongside a presidential competition council meeting, frames the issue not merely as a business dispute but as a structural imbalance embedded in the very infrastructure of modern mobile life. The administration's message is clear: when the referee also owns the playing field, the game itself is compromised.
- The federal government has moved from observation to accusation, formally charging that Apple and Google use their dual control of operating systems and app stores to tilt markets in their own favor.
- Developers caught inside these ecosystems face fees of 15 to 30 percent and functional restrictions that quietly demote their products while elevating the platforms' own offerings.
- Apple's closed ecosystem alone generates up to $20 billion annually, a revenue stream that critics argue is built on captive markets rather than genuine competition.
- Both companies fired back with familiar defenses — security, openness, consumer trust — arguments already being tested in courtrooms where antitrust battles are actively underway.
- The Commerce Department stopped short of prescribing specific laws but made its conclusion unmistakable: legislative and antitrust intervention is no longer optional, it is necessary.
On a Wednesday in early 2023, the Biden administration made its most direct move yet against the app store dominance of Apple and Google. The Commerce Department's telecommunications agency released a report describing the two companies' practices as harmful to both consumers and developers — a formal finding timed to coincide with President Biden convening his competition council to address market concentration and pricing.
The structural complaint at the heart of the report is straightforward: Apple and Google don't merely run the two dominant app stores, they own the operating systems beneath them. That dual control gives them the power to impose high fees on developers, restrict functionality in ways that favor their own products, and effectively determine who succeeds or fails in the mobile economy. Apple's closed ecosystem generates between $15 and $20 billion annually through commissions alone, a figure that has helped push the company's market value toward $2.4 trillion.
Biden had previewed this posture in a Wall Street Journal op-ed the month prior, writing about large platforms using their scale to crowd out smaller competitors — though he stopped short of naming either company directly. Both Apple and Google responded to the report by defending their platforms as secure, open, and pro-competitive, echoing arguments they have already deployed in ongoing court battles over app store practices.
The Commerce Department's conclusion carried weight even without prescribing specific remedies: the current model requires intervention, and new legislation alongside antitrust enforcement is likely necessary. Whether Congress translates that finding into law remains uncertain — Big Tech's lobbying resources are formidable — but the formal government declaration that these app stores harm the broader market represents a meaningful escalation in regulatory pressure.
The Biden administration released a formal accusation on Wednesday: Apple and Google have built app store empires that crush competition, inflate prices, and stifle the very innovation they claim to protect. The charge came from the Commerce Department's National Telecommunications and Information Administration, a report timed to coincide with President Biden's convening of his competition council to discuss efforts to lower prices and open markets.
The core complaint is structural. Apple and Google don't just operate the two dominant mobile app stores—they own the operating systems those stores run on, giving them power that amounts to a stranglehold. The report describes their policies as "harmful to consumers and developers." Developers face high fees just to access the platforms. They encounter functional restrictions that mysteriously favor Apple's and Google's own apps over competitors. The playing field, in other words, is tilted before anyone steps onto it.
The financial stakes are enormous. Apple's "walled garden"—the company's term for its closed ecosystem—generates between $15 billion and $20 billion annually through commissions ranging from 15 to 30 percent on digital purchases and subscriptions. That revenue stream has helped push Apple's market value to nearly $2.4 trillion. Google defends Android as more open than competitors, but the report suggests that openness is more appearance than reality.
Biden himself had signaled this direction in a Wall Street Journal op-ed the previous month, writing about how large tech platforms use their size to promote their own products while excluding or disadvantaging rivals. "My vision for our economy is one in which everyone—small and midsized businesses, mom-and-pop shops, entrepreneurs—can compete on a level playing field with the biggest companies," he wrote, without naming Apple or Google directly.
Both companies pushed back immediately. Apple's response emphasized its investments in privacy and security, arguing these create a safe, trusted platform where small developers can actually compete. Google's statement focused on Android's diversity, claiming it enables more choice and competition than any other mobile operating system. These defenses echo arguments the companies have made in court, where legal battles over app store dominance are already underway.
The Commerce Department's conclusion was blunt: the current model requires intervention. New legislation and additional antitrust enforcement actions are likely necessary, the report stated. Alan Davidson, the NTIA administrator, said the findings identify where lawmakers would need to act. The report stops short of recommending specific legislation, but the direction is clear—the status quo, in the administration's view, cannot stand.
What happens next depends on Congress. The report provides ammunition for lawmakers already skeptical of Big Tech's market power, but translating that skepticism into law has proven difficult. Apple and Google have deep resources and sophisticated lobbying operations. Still, the formal government finding that their app stores harm both consumers and developers marks a significant escalation in the regulatory pressure these companies face.
Notable Quotes
When tech platforms get big enough, many find ways to promote their own products while excluding or disadvantaging competitors—or charge competitors a fortune to sell on their platform.— President Joe Biden
The policies that Apple and Google have in place in their own mobile app stores have created unnecessary barriers and costs for app developers, ranging from fees for access to functional restrictions that favor some apps over others.— Commerce Department report
The Hearth Conversation Another angle on the story
Why does it matter that Apple and Google control the app stores? Couldn't someone just build a competing app store?
In theory, yes. In practice, Apple doesn't allow competing app stores on iPhones—that's the "walled garden." Google's Android is more open, but most phones come with Google Play pre-installed and set as default. Switching costs are high, and network effects are powerful. If all your friends use the iPhone app store, that's where developers have to be.
So the 15 to 30 percent commission—is that the main problem?
It's part of it, but not the whole story. The real issue is that Apple and Google set the rules, collect the fees, and also compete as app makers themselves. Imagine if Walmart owned the only shopping mall in town, took 30 percent of every sale, and also sold competing products. That's closer to the dynamic here.
Apple says its "walled garden" protects privacy and security. Is that a fair defense?
It's a real benefit—there's genuine value in that security. But the report's point is that you could have security without monopoly control. Other closed systems exist. The question is whether the current arrangement is the only way to achieve that protection, or whether it's just the most profitable way.
What does new legislation actually look like?
The report doesn't say. That's the hard part. You could require interoperability—let third-party app stores exist on iPhones. You could cap commission rates. You could separate the platform from the store. Each approach has tradeoffs, and the companies will fight hard against all of them.
Is this actually going to change anything?
That depends on Congress, and Congress moves slowly on tech regulation. But the fact that the Commerce Department is now formally saying the current system is harmful—that's a shift. It gives lawmakers political cover to act, and it signals to courts that government thinks there's a real problem here.