App Store Mergers and Vertical Restraints

1. Introduction

An app store merger occurs when an app-store operator acquires or combines with another app marketplace, mobile operating-system provider, payment platform, application developer, cloud service, advertising network, or digital-distribution intermediary.

The competition-law analysis becomes more complex when the transaction also creates or strengthens vertical restraints. Vertical restraints are restrictions imposed between firms operating at different levels of the supply chain, such as:

An operating-system provider and app developers;

An app store and payment processors;

An app marketplace and advertising services;

A device manufacturer and an app-distribution platform;

A platform and cloud-gaming providers.

A merger may therefore cause harm even where the merging parties are not direct competitors. The merged firm may gain the ability and incentive to restrict access to users, raise rivals’ costs, favour its own applications, or control essential digital infrastructure.

The central question is:

Will the merger allow the combined undertaking to use control over one digital market to foreclose competition in another related market?

2. Difference Between Horizontal and Vertical App-Store Mergers

A. Horizontal merger

A horizontal merger occurs between competing app stores or competing application-distribution services.

Examples include:

Two independent app marketplaces;

Two gaming-console app stores;

Two mobile application-distribution platforms.

Possible effects include:

Higher concentration;

Elimination of a competitor;

Increased commissions;

Reduced developer choice;

Fewer alternative distribution channels.

B. Vertical merger

A vertical merger occurs between firms at different levels of the supply chain.

Examples include:

An app store acquiring a payment provider;

An operating-system provider acquiring a game developer;

An app marketplace acquiring an advertising platform;

A device manufacturer acquiring a cloud-gaming service.

Possible effects include:

Input foreclosure;

Customer foreclosure;

Self-preferencing;

Tying;

Discriminatory access;

Use of commercially sensitive data.

C. Conglomerate merger

A conglomerate merger combines firms operating in related but not directly connected markets.

For example, an app-store operator may acquire:

A music-streaming service;

A video platform;

A digital wallet;

A browser;

A cloud service;

An artificial-intelligence assistant.

Such a merger may strengthen ecosystem power and increase the ability to bundle services or disadvantage rival applications.

3. Indian Legal Framework

A. Sections 5 and 6 of the Competition Act, 2002

An app-store transaction may qualify as a combination under Section 5 if the relevant asset, turnover, or transaction-value thresholds are met.

Under Section 6, the CCI may prohibit or modify a combination that causes or is likely to cause an appreciable adverse effect on competition.

B. Section 3

After a merger, the combined firm may enter into anti-competitive agreements involving:

Exclusive distribution;

Exclusive supply;

Tying;

Refusal to deal;

Resale price maintenance;

Restrictions on alternative payment providers.

C. Section 4

If the merged undertaking is dominant, it may abuse its position by:

Imposing unfair or discriminatory conditions;

Denying market access;

Favouring its own applications;

Restricting rival app stores;

Requiring mandatory use of its billing system;

Applying discriminatory commissions;

Using developer data to compete against developers.

D. Section 19(4)

The CCI may consider:

Market share;

Network effects;

User dependence;

Entry barriers;

Control over data;

Technical infrastructure;

Financial resources;

Vertical integration;

Switching costs;

The strength of competing ecosystems.

E. Section 20

The CCI may inquire into combinations and examine their likely effects on competition, including the effect on innovation, consumers, competitors, and market access.

4. Relevant Markets in App-Store Merger Analysis

The relevant market should not automatically be defined as the entire digital economy.

Possible markets include:

Mobile app distribution;

In-app payment services;

Mobile operating systems;

Gaming-console distribution;

Cloud-gaming services;

Digital advertising;

App-discovery services;

Developer analytics;

Digital subscription payments;

Mobile wallet services;

Application hosting;

AI-based application discovery.

The authority should consider whether consumers can realistically switch between:

Different app stores;

Different operating systems;

Web-based applications;

Alternative payment channels;

Alternative gaming platforms;

Direct developer websites.

Technical availability alone may not establish effective substitutability. An alternative may be commercially weak because of limited users, lack of applications, security concerns, or absence of necessary device access.

5. How App-Store Mergers Create Vertical Restraint Risks

A. Input foreclosure

Input foreclosure occurs where the merged firm restricts competitors’ access to an important input.

Examples include denying rival applications access to:

Operating-system APIs;

Payment services;

Device functionality;

Notifications;

App-store listing;

Developer tools;

User authentication;

Cloud infrastructure.

B. Customer foreclosure

Customer foreclosure occurs where the merged firm prevents suppliers from reaching an important customer group.

For example, an app-store operator may prevent rival developers or payment providers from reaching users through its marketplace.

C. Self-preferencing

The merged firm may favour its own downstream applications by:

Giving them better rankings;

Pre-installing them;

Providing privileged API access;

Granting faster approval;

Charging lower commissions;

Giving them better access to user data.

D. Tying and bundling

The merged firm may condition app-store access on the use of:

Its payment system;

Its advertising network;

Its identity service;

Its cloud platform;

Its analytics tools.

E. Data advantage

The merged firm may obtain information from independent developers and use it to launch competing products.

For example, an app store may observe:

Download numbers;

User engagement;

Revenue;

Subscription conversion;

Customer complaints;

App performance;

Search rankings.

It may then use that information to copy or favour its own applications.

F. Interoperability restrictions

The merged firm may restrict interoperability with:

Alternative app stores;

Digital wallets;

Cloud-gaming services;

Messaging applications;

Browsers;

Payment providers;

Smart-device systems.

G. Increased switching costs

The merger may make it more difficult for users and developers to move to another ecosystem because of:

Purchased applications;

Stored payment details;

Loyalty benefits;

User accounts;

Ratings and reviews;

Developer tools;

Technical integration;

Cloud storage.

6. Important Case Laws

1. Epic Games, Inc. v. Apple Inc.

Court: United States District Court for the Northern District of California Year: 2021

Facts

Epic Games challenged Apple’s App Store rules, particularly the mandatory use of Apple’s payment system and restrictions on external purchasing links.

Decision

The court rejected several of Epic’s claims but granted relief concerning anti-steering restrictions. Apple was required to permit certain communications concerning alternative purchasing methods.

Principle

A platform’s contractual rules may raise competition concerns where they prevent developers from informing users about alternative payment or purchasing channels.

Relevance to mergers

If an app-store operator acquires a payment provider, the merged firm may have a stronger incentive to:

Require use of its payment system;

Block external payment links;

Raise commissions;

Prevent developers from developing direct customer relationships.

The case shows how payment control can become a vertical restraint.

2. Epic Games, Inc. v. Google LLC

Court: United States District Court for the Northern District of California Year: 2023

Facts

Epic challenged Google’s practices concerning Android app distribution, billing, and commercial agreements with developers and device manufacturers.

Decision

A jury found that Google had unlawfully maintained monopoly power in relevant app-distribution and in-app-billing markets.

Principle

A platform may unlawfully preserve market power through agreements, incentives, and restrictions that prevent rival app stores or payment systems from developing.

Relevance to mergers

A merger involving an app store and a payment provider may increase the ability to:

Tie app distribution to billing;

Restrict alternative app stores;

Offer discriminatory revenue shares;

Prevent developers from steering users elsewhere;

Use device-manufacturer agreements to exclude rivals.

3. United States v. Microsoft Corp.

Court: United States District Court for the District of Columbia; United States Court of Appeals for the District of Columbia Circuit Year: 2001 appellate judgment

Facts

Microsoft used its operating-system dominance to disadvantage competing browsers and restrict rival software products.

Principle

A dominant platform may not use control over a critical technological system to exclude competitors in adjacent markets.

Relevance to app-store mergers

The case is relevant where a merger combines:

An operating-system provider;

An app store;

A competing application;

A browser;

A cloud service.

The merged firm may use default settings, APIs, technical permissions, or installation processes to disadvantage rival applications.

4. Google Search (Shopping)

Authority: European Commission Year: 2017

Facts

Google favoured its own comparison-shopping service in general search results and demoted competing comparison-shopping services.

Principle

A dominant platform may abuse its position by using control over a key gateway to favour its own downstream service.

Relevance to app-store mergers

A merger may create or strengthen the ability to:

Prefer the platform’s own applications;

Give affiliated apps better search placement;

Apply ranking criteria selectively;

Use competitor data to improve the platform’s own apps;

Provide preferential access to technical features.

This case is particularly important for self-preferencing and algorithmic discrimination.

5. European Commission v. Apple — Music Streaming Practices

Authority: European Commission Year: 2024

Facts

The Commission examined Apple’s anti-steering rules affecting music-streaming applications. The rules restricted developers from informing users about cheaper subscription options outside the App Store.

Decision

The Commission found that Apple’s anti-steering provisions constituted an abuse of dominant position in the distribution of music-streaming apps on iOS devices.

Principle

A dominant app-store operator may not prevent developers from informing consumers about alternative purchasing options where the restriction weakens competition and protects platform commissions.

Relevance to mergers

If an app store acquires a subscription or payment business, the merged firm may have an increased incentive to impose anti-steering rules. The case illustrates the danger of combining distribution power with control over payments and subscriptions.

6. United States v. Apple Inc.

Court: United States District Court for the District of New Jersey Filed: 2024

Facts

The United States alleged that Apple used restrictions within its smartphone ecosystem to maintain monopoly power and restrict competing services.

The allegations concerned interoperability, application functionality, access to device features, payment services, and switching between ecosystems.

Principle

An integrated digital ecosystem may create market power where one firm controls the operating system, device, app distribution, payments, and user access.

Relevance to mergers

The case is relevant to conglomerate and vertical mergers involving:

App stores;

Device manufacturers;

Payment systems;

Digital wallets;

Messaging services;

Browsers;

Cloud-gaming services.

The merger authority should consider whether the transaction strengthens the ability to use ecosystem control to disadvantage rival services.

7. Meta Platforms, Inc. v. Bundeskartellamt

Court: Court of Justice of the European Union Case: C-252/21 Year: 2023

Facts

The case concerned Meta’s combination of data from different services and the relationship between competition law and data-protection rules.

Principle

Data practices may be relevant to competition law where a dominant undertaking imposes unfair conditions or uses data advantages to strengthen its position.

Relevance to app-store mergers

An app-store merger may combine data relating to:

App downloads;

User purchases;

Engagement;

Subscriptions;

Search behaviour;

Advertising;

Developer performance.

The merged firm may use this information to copy rival apps, discriminate in ranking, or deny developers meaningful access to their own data.

8. CCI v. Steel Authority of India Ltd.

Court: Supreme Court of India Citation: (2010) 10 SCC 744

Facts

The case concerned the CCI’s power to form a prima facie opinion and direct an investigation.

Principle

The Supreme Court clarified the procedural framework governing investigations under the Competition Act.

Relevance to app-store mergers

The case is relevant to the CCI’s examination of:

Merger-related agreements;

Commission structures;

Exclusive distribution;

Payment restrictions;

Technical access;

App approval;

Ranking practices;

Data-sharing arrangements.

It is not app-store-specific, but it provides an important foundation for understanding CCI investigations.

7. Merger-Specific Competitive Effects

A. Elimination of a potential competitor

An app-store operator may acquire a smaller alternative marketplace before it becomes a serious competitor.

This is sometimes described as a nascent-competitor or killer-acquisition concern.

The authority should examine:

The target’s growth;

Its technology;

Its user base;

Its innovation potential;

Its ability to develop a competing ecosystem;

Whether the acquirer would otherwise have faced competitive pressure.

B. Increased commissions

A merger may enable the combined firm to raise commissions paid by developers because developers have fewer alternative distribution channels.

C. Reduced innovation

The merged firm may have less incentive to improve:

Payment services;

App discovery;

Developer tools;

Privacy protections;

Security;

Revenue-sharing terms;

Interoperability.

D. Foreclosure of payment providers

Where an app store acquires a payment provider, it may deny rival payment providers access to in-app transactions.

E. Foreclosure of app developers

Where an app store acquires a competing application developer, it may:

Reduce the app’s visibility;

Deny technical access;

Increase its commission;

Delay approval;

Restrict updates;

Use confidential developer data against it.

F. Ecosystem expansion

A merger may allow the platform to extend its power into:

Music;

Gaming;

Video;

Digital finance;

Cloud computing;

Artificial intelligence;

Advertising;

Health applications.

The concern is whether the transaction creates an ecosystem that competitors cannot realistically challenge.

8. Efficiencies and Legitimate Business Justifications

The parties may argue that the merger will create:

Better security;

Faster app approval;

Improved fraud prevention;

More reliable payments;

Lower transaction costs;

Better integration between hardware and software;

Improved privacy;

Greater innovation;

More efficient technical support.

These efficiencies should be:

Verifiable;

Merger-specific;

Likely to benefit consumers;

Sufficient to offset possible competitive harm.

Security and privacy claims should not be accepted automatically. The authority should ask whether the same benefits could be achieved through less restrictive means.

9. Remedies

A. Structural remedies

These may include:

Divestiture of an app store;

Sale of a payment subsidiary;

Separation of a competing application;

Disposal of exclusive distribution rights;

Divestiture of technical assets.

B. Behavioural remedies

These may include:

Allowing alternative payment systems;

Prohibiting anti-steering rules;

Requiring non-discriminatory app ranking;

Providing fair API access;

Preventing self-preferencing;

Requiring transparent app-review procedures;

Prohibiting use of rival developers’ confidential data;

Allowing alternative app stores.

C. Interoperability remedies

The merged firm may be required to permit access to:

Operating-system functions;

Payment interfaces;

Notifications;

User authentication;

Device features;

App-distribution mechanisms.

D. Data remedies

Possible obligations include:

Data portability;

Separation of developer data;

Restrictions on combining data;

Access to performance information;

Prohibition on using rival developers’ data to compete against them.

E. Access remedies

The platform may be required to provide reasonable access to:

App-store listings;

Developer tools;

APIs;

Payment services;

Advertising systems;

Technical certification.

10. Factors Considered by a Competition Authority

A competition authority may examine:

The market shares of the merging parties;

The number of alternative app stores;

The level of developer dependence;

The availability of web-based alternatives;

The strength of rival operating systems;

Network effects;

Switching costs;

Access to user data;

Control over payment systems;

The importance of app-store commissions;

The possibility of self-preferencing;

The likelihood of foreclosure;

The parties’ internal business documents;

Innovation effects;

Consumer benefits;

The effectiveness of proposed remedies.

11. Conclusion

App-store mergers may create competition concerns even where the parties do not directly compete. A transaction involving an app store, operating system, payment service, application developer, advertising platform, or cloud service may strengthen the merged firm’s gatekeeper power.

The most important risks are:

Elimination of an emerging app-store competitor;

Mandatory use of the merged firm’s payment system;

Anti-steering restrictions;

Self-preferencing;

Tying and bundling;

Exclusive distribution;

Discriminatory app approval;

API and interoperability restrictions;

Misuse of developer data;

Higher commissions;

Foreclosure of rival applications and payment providers.

The legal inquiry is whether the merger creates efficiencies that benefit consumers or instead gives the combined undertaking the ability and incentive to control access to users and exclude competitors. The principles developed in Epic Games v. Apple, Epic Games v. Google, Microsoft, Google Shopping, the European Commission’s Apple music-streaming decision, United States v. Apple, Meta v. Bundeskartellamt, and CCI v. SAIL provide a useful framework for analysing these issues.

App Store Mergers and Vertical Restraints

1. Introduction

An app store merger occurs when an app-store operator acquires or combines with another app marketplace, mobile operating-system provider, payment service, application developer, advertising network, cloud platform, or digital-distribution intermediary.

The competition concerns become more serious when the merger creates or strengthens vertical restraints. Vertical restraints are restrictions imposed between firms operating at different levels of the supply chain.

In the app-store ecosystem, vertical relationships may exist between:

An operating-system provider and app developers;

An app store and payment processors;

An app marketplace and advertising providers;

A device manufacturer and an app-distribution platform;

A platform and cloud-gaming services;

An app store and subscription-service providers.

A merger may therefore harm competition even when the parties are not direct competitors. The merged undertaking may acquire the ability and incentive to:

Restrict access to users;

Favour its own applications;

Exclude alternative app stores;

Force developers to use its payment system;

Increase commissions;

Use competitors’ data;

Prevent interoperability;

Raise rivals’ costs.

The central question is:

Will the merger allow the combined undertaking to use power in one digital market to foreclose competition in another related market?

2. Horizontal, Vertical and Conglomerate App-Store Mergers

A. Horizontal merger

A horizontal merger takes place between competing app stores or competing application-distribution platforms.

Examples include:

Two independent mobile app stores;

Two gaming-console marketplaces;

Two cloud-software marketplaces.

Potential effects include:

Increased concentration;

Elimination of a competitor;

Higher commissions;

Reduced developer choice;

Fewer alternative distribution channels.

B. Vertical merger

A vertical merger occurs between firms operating at different levels of the supply chain.

Examples include:

An app store acquiring a payment provider;

An operating-system provider acquiring a game developer;

An app marketplace acquiring an advertising platform;

A device manufacturer acquiring a cloud-gaming service.

Potential effects include:

Input foreclosure;

Customer foreclosure;

Self-preferencing;

Tying;

Discriminatory access;

Misuse of commercially sensitive data.

C. Conglomerate merger

A conglomerate merger combines firms operating in related but distinct markets.

For example, an app-store operator may acquire:

A music-streaming service;

A video platform;

A digital wallet;

A browser;

A cloud-computing service;

An artificial-intelligence assistant.

Such a merger may strengthen ecosystem power and facilitate bundling or exclusionary conduct.

3. Indian Legal Framework

A. Sections 5 and 6 of the Competition Act, 2002

An app-store transaction may constitute a combination under Section 5 if the applicable asset, turnover, or transaction-value thresholds are satisfied.

Under Section 6, the Competition Commission of India may prohibit or modify a combination that causes or is likely to cause an appreciable adverse effect on competition, commonly referred to as an AAEC.

B. Section 3

After a merger, the combined undertaking may enter into anti-competitive agreements involving:

Exclusive distribution;

Exclusive supply;

Tying;

Refusal to deal;

Resale price maintenance;

Restrictions on alternative payment providers;

Agreements preventing developers from using rival marketplaces.

C. Section 4

If the merged entity becomes dominant, its conduct may be examined under Section 4. Possible abuses include:

Imposing unfair or discriminatory conditions;

Denying market access;

Favouring its own applications;

Restricting rival app stores;

Requiring mandatory use of its billing system;

Imposing discriminatory commissions;

Using developer data to compete against developers.

D. Section 19(4)

The CCI may consider:

Market share;

Size and resources;

Economic strength;

Network effects;

Consumer dependence;

Entry barriers;

Data advantages;

Vertical integration;

Switching costs;

Control over technical infrastructure.

E. Section 20

The CCI may inquire into combinations and assess their likely effect on:

Competition;

Innovation;

Consumers;

Competitors;

Market access;

Technological development;

The ability of new entrants to expand.

4. Relevant Markets

The relevant market should not automatically be defined as the entire digital economy. Possible relevant markets include:

Mobile app distribution;

In-app payment services;

Mobile operating systems;

Gaming-console distribution;

Cloud-gaming services;

Digital advertising;

App-discovery services;

Developer analytics;

Digital subscription payments;

Mobile wallet services;

Application hosting;

AI-based application discovery.

The authority must examine whether users and developers can realistically switch to:

Other app stores;

Different operating systems;

Web-based applications;

Alternative payment channels;

Other gaming platforms;

Direct developer websites.

An alternative may be technically available but commercially ineffective because it lacks users, applications, security, or access to essential device functions.

5. Main Vertical Restraint Risks

A. Input foreclosure

Input foreclosure occurs when the merged firm restricts competitors’ access to an important input.

Relevant inputs may include:

Operating-system APIs;

Payment services;

Device functionality;

Notifications;

App-store listings;

Developer tools;

User authentication;

Cloud infrastructure.

B. Customer foreclosure

Customer foreclosure occurs when the merged undertaking prevents suppliers from reaching an important group of customers.

For example, an app-store operator may prevent rival developers or payment providers from reaching users through its marketplace.

C. Self-preferencing

The platform may favour its own applications by:

Giving them better search ranking;

Pre-installing them;

Providing privileged API access;

Granting faster approval;

Charging lower commissions;

Giving them better access to user data.

D. Tying and bundling

The merged firm may condition access to app distribution on the use of:

Its payment system;

Its advertising network;

Its identity service;

Its cloud platform;

Its analytics tools.

E. Data foreclosure

The app store may collect data about:

Downloads;

Purchases;

User engagement;

Subscription conversion;

Search behaviour;

Revenue;

Developer performance.

The merged entity may then use this information to copy, rank against, or disadvantage independent developers.

F. Interoperability restrictions

The merged firm may restrict access to:

Alternative app stores;

Digital wallets;

Cloud-gaming services;

Browsers;

Messaging services;

Payment providers;

Smart-device systems.

G. Increased switching costs

The merger may make switching difficult because users and developers depend on:

Purchased applications;

Stored payment details;

Loyalty benefits;

User accounts;

Reviews and ratings;

Developer tools;

Cloud storage;

Technical integration.

6. Important Case Laws

1. Epic Games, Inc. v. Apple Inc.

Court: United States District Court for the Northern District of California Year: 2021

Facts

Epic Games challenged Apple’s App Store rules, particularly the mandatory use of Apple’s payment system and restrictions on external purchasing links.

Epic argued that Apple’s rules restricted competition in app distribution and in-app payments.

Decision

The court rejected several of Epic’s claims but granted relief concerning anti-steering restrictions. Apple was required to permit certain communications concerning alternative purchasing methods.

Principle

A platform’s contractual restrictions may raise competition concerns where they prevent developers from informing users about alternative payment or purchasing channels.

Relevance to mergers

If an app-store operator acquires a payment provider, the merged firm may have a stronger incentive to:

Require use of its own billing system;

Block external payment links;

Raise commissions;

Prevent developers from developing direct customer relationships.

The case shows how payment control can become a vertical restraint.

2. Epic Games, Inc. v. Google LLC

Court: United States District Court for the Northern District of California Year: 2023

Facts

Epic challenged Google’s practices concerning Android app distribution, billing systems, and commercial arrangements with developers and device manufacturers.

Decision

A jury found that Google had unlawfully maintained monopoly power in relevant app-distribution and in-app-billing markets.

Principle

A platform may preserve market power through contracts, incentives, and payment restrictions that prevent rival app stores or billing systems from developing.

Relevance to mergers

A merger involving an app store and a payment provider may increase the ability to:

Tie app distribution to billing;

Restrict alternative app stores;

Offer discriminatory revenue shares;

Prevent developers from steering users elsewhere;

Use device-manufacturer agreements to exclude rivals.

3. United States v. Microsoft Corp.

Court: United States District Court for the District of Columbia; United States Court of Appeals for the District of Columbia Circuit Year: 2001 appellate judgment

Facts

Microsoft used its operating-system dominance to disadvantage competing browsers and restrict rival software products.

Principle

A dominant platform cannot use control over a critical technological system to exclude competitors in adjacent markets.

Relevance to app-store mergers

The case is relevant where a merger combines:

An operating-system provider;

An app store;

A competing application;

A browser;

A cloud service.

The merged firm may use default settings, APIs, technical permissions, or installation processes to disadvantage rival applications.

4. Google Search (Shopping)

Authority: European Commission Year: 2017

Facts

Google favoured its own comparison-shopping service in general search results and demoted competing comparison-shopping services.

Principle

A dominant platform may abuse its position by using control over a key gateway to favour its own downstream service.

Relevance to app-store mergers

A merged app-store operator may:

Prefer its own applications;

Give affiliated apps better search placement;

Apply ranking criteria selectively;

Use competitor data to improve its own apps;

Provide its own apps with superior technical access.

The case is particularly relevant to self-preferencing and algorithmic discrimination.

5. European Commission v. Apple — Music Streaming Practices

Authority: European Commission Year: 2024

Facts

The Commission examined Apple’s anti-steering rules affecting music-streaming applications. The rules restricted developers from informing users about cheaper subscription options outside the App Store.

Decision

The Commission found that Apple’s anti-steering provisions constituted an abuse of dominant position in the distribution of music-streaming applications on iOS devices.

Principle

A dominant app-store operator may not prevent developers from informing consumers about alternative purchasing options where the restriction weakens competition and protects platform commissions.

Relevance to mergers

If an app store acquires a subscription or payment business, the merged firm may have an increased incentive to impose anti-steering rules. The case illustrates the danger of combining distribution power with control over payments and subscriptions.

6. United States v. Apple Inc.

Court: United States District Court for the District of New Jersey Filed: 2024

Facts

The United States alleged that Apple used restrictions within its smartphone ecosystem to maintain monopoly power and restrict competing services.

The allegations concerned interoperability, application functionality, access to device features, payment services, and switching between ecosystems.

Principle

An integrated digital ecosystem may create market power where one firm controls the operating system, device, app distribution, payments, and user access.

Relevance to mergers

The case is relevant to transactions involving:

App stores;

Device manufacturers;

Payment systems;

Digital wallets;

Messaging services;

Browsers;

Cloud-gaming services.

It demonstrates how vertical restrictions can operate across several connected digital markets.

7. Meta Platforms, Inc. v. Bundeskartellamt

Court: Court of Justice of the European Union Case: C-252/21 Year: 2023

Facts

The case concerned Meta’s combination of data from different services and the relationship between competition law and data-protection rules.

Principle

Data practices may be relevant to competition law where a dominant undertaking imposes unfair conditions or uses data advantages to strengthen its market position.

Relevance to app-store mergers

An app-store merger may combine data relating to:

App downloads;

User purchases;

Engagement;

Subscriptions;

Search behaviour;

Advertising;

Developer performance.

The merged firm may use this information to copy rival apps, discriminate in ranking, or deny developers meaningful access to their own data.

8. CCI v. Steel Authority of India Ltd.

Court: Supreme Court of India Citation: (2010) 10 SCC 744

Facts

The case concerned the CCI’s power to form a prima facie opinion and direct an investigation.

Principle

The Supreme Court clarified the procedural framework governing investigations under the Competition Act.

Relevance to app-store mergers

The case is relevant to the CCI’s examination of:

Merger-related agreements;

Commission structures;

Exclusive distribution;

Payment restrictions;

Technical access;

App approval;

Ranking practices;

Data-sharing arrangements.

Although not app-store-specific, it provides an important foundation for understanding CCI investigations.

7. Merger-Specific Competitive Effects

A. Elimination of a potential competitor

An app-store operator may acquire a smaller alternative marketplace before it becomes a serious competitor.

The authority should examine:

The target’s growth;

Its technology;

Its user base;

Its innovation potential;

Its ability to develop a competing ecosystem;

Whether the acquirer would otherwise face competitive pressure.

B. Increased commissions

A merger may enable the combined firm to raise commissions paid by developers because developers have fewer alternative distribution channels.

C. Reduced innovation

The merged firm may have less incentive to improve:

Payment services;

App discovery;

Developer tools;

Privacy protections;

Security;

Revenue-sharing terms;

Interoperability.

D. Foreclosure of payment providers

Where an app store acquires a payment provider, it may deny rival payment providers access to in-app transactions.

E. Foreclosure of app developers

Where an app store acquires a competing application developer, it may:

Reduce the application’s visibility;

Deny technical access;

Increase its commission;

Delay approval;

Restrict updates;

Use confidential developer data against it.

F. Ecosystem expansion

A merger may allow the platform to extend its power into:

Music;

Gaming;

Video;

Digital finance;

Cloud computing;

Artificial intelligence;

Advertising;

Health applications.

The concern is whether the transaction creates an ecosystem that competitors cannot realistically challenge.

8. Efficiencies and Legitimate Justifications

The merging parties may argue that the transaction will create:

Better security;

Faster app approval;

Improved fraud prevention;

More reliable payments;

Lower transaction costs;

Better hardware-software integration;

Improved privacy;

Greater innovation;

More efficient technical support.

These efficiencies should be:

Verifiable;

Merger-specific;

Likely to benefit consumers;

Sufficient to offset possible competitive harm.

Security and privacy claims should not be accepted automatically. The authority should ask whether the same benefits could be achieved through less restrictive methods.

9. Possible Remedies

A. Structural remedies

These may include:

Divestiture of an app store;

Sale of a payment subsidiary;

Separation of a competing application;

Disposal of exclusive distribution rights;

Divestiture of technical assets.

B. Behavioural remedies

These may include:

Allowing alternative payment systems;

Prohibiting anti-steering rules;

Requiring non-discriminatory app ranking;

Providing fair API access;

Preventing self-preferencing;

Requiring transparent app-review procedures;

Prohibiting use of rival developers’ confidential data;

Allowing alternative app stores.

C. Interoperability remedies

The merged firm may be required to permit access to:

Operating-system functions;

Payment interfaces;

Notifications;

User authentication;

Device features;

App-distribution mechanisms.

D. Data remedies

Possible obligations include:

Data portability;

Separation of developer data;

Restrictions on combining data;

Access to performance information;

Prohibition on using rival developers’ data to compete against them.

E. Access remedies

The platform may be required to provide reasonable access to:

App-store listings;

Developer tools;

APIs;

Payment services;

Advertising systems;

Technical certification.

10. Factors Considered by a Competition Authority

A competition authority may examine:

Market shares of the merging parties;

The number of alternative app stores;

Developer dependence;

Availability of web-based alternatives;

Strength of rival operating systems;

Network effects;

Switching costs;

Access to user data;

Control over payment systems;

Importance of app-store commissions;

Possibility of self-preferencing;

Likelihood of foreclosure;

Internal business documents;

Innovation effects;

Consumer benefits;

Effectiveness of proposed remedies.

11. Conclusion

App-store mergers may create competition concerns even where the parties do not directly compete. A transaction involving an app store, operating system, payment service, application developer, advertising platform, or cloud service may strengthen the merged firm’s gatekeeper power.

The principal risks are:

Elimination of an emerging app-store competitor;

Mandatory use of the merged firm’s payment system;

Anti-steering restrictions;

Self-preferencing;

Tying and bundling;

Exclusive distribution;

Discriminatory app approval;

API and interoperability restrictions;

Misuse of developer data;

Higher commissions;

Foreclosure of rival applications and payment providers.

The decisive legal inquiry is whether the merger creates genuine efficiencies that benefit consumers or instead gives the combined undertaking the ability and incentive to control access to users and exclude competitors. The principles developed in Epic Games v. Apple, Epic Games v. Google, United States v. Microsoft, Google Shopping, the European Commission’s Apple music-streaming decision, United States v. Apple, Meta v. Bundeskartellamt, and CCI v. SAIL provide a useful framework for analysing these issues.