App market is the responsibility of Cofece: José Manuel Haro

The Investigative Authority of the Federal Economic Competition Commission (Coffee) is convinced that the investigation of relative monopolistic practices in the market for the development, distribution and processing of payment of mobile apps and digital content falls into your decision area.

The market to be analyzed —dominated by the Play Store of Google and the AppStore of Apple – is being investigated by several competition authorities in different jurisdictions, in the United States, Asia and the European continent, to which Mexico is now added.

Not every digital market is for telecommunications and broadcasting, he summarized Jose Manuel Haroinvestigative authority of Cofece about the investigations on the telephone app store market that were initiated almost at the same time by the Mexican competition authority (Cofece) as the telecommunications regulator (IFT).

Not all digital markets are part of the process of the markets that involve the broadcasting and telecommunications sector,” Haro said in an interview.

Depending on the course of the investigation, the options are for one of the two autonomous bodies to ask the Judiciary to decide which authority is competent in the sector or for a judicial authority to request the investigation file from either party.

two investigations

The IFT investigative authority, led by Paulina Martínez Youn, began an investigation on September 29 on possible “relative monopolistic practices in the application store market for mobile operating systems and their related markets.”

José Manuel Haro argued that Cofece’s investigation, released on September 30, is broader, because it covers both the development, distribution and payment processing of mobile applications and digital content. According to the official, the study of this market also implies the analysis of business models that go beyond application stores.

“What the Commission (Cofece) is going to do is analyze the different business models. Each of these applications has different characteristics. There are applications that use different means to monetize. Some use advertising, others use in-app purchases; others, the download of applications with cost. We have to keep in mind that not all apps are necessarily downloaded through an app store,” he said.

Google and Apple, however, have 100% of the profits from app stores in the Mexican market, according to Statista. This is because, to a large extent, the use of an application store is linked to the operating system of a device and in Mexico, as in much of the world, two operating systems also dominate: Android from Google and iOS from Apple.

Other application stores such as those of Huawei and Baidu do not appear practically on the smartphones of users in Mexico. The profits of this market in 2022 will be around 1,555 million dollars that originate mainly from the sale of advertising and purchases within the apps.

Ex officio and by complaint

The IFT investigation began with a complaint and Cofece’s investigation was initiated ex officio. Both bodies had already heard, however, of indications of relative monopolistic practices in the application store market through a complaint filed by the former commissioner of the former Federal Telecommunications Commission (Cofetel), Mony de Swaan.

While Cofece sent a prevention agreement to De Swaan to request more information about the investigation, to which he responded with a withdrawal, the IFT admitted the complaint and began the investigation. A day later, the commission opened its own ex officio investigation.

For De Swaan, this conduct by Cofece “seems to serve the interests of these companies” (Apple and Google), as he wrote on his Twitter account. De Swaan, founding partner of the Center for Studies and Research in Public Affairs (CEIAP), recalled other cases in which Cofece and the IFT disputed competition over a market in court.

The most recent concerns an investigation that the IFT initiated into the markets for online search services, social networks, cloud computing services, and mobile operating systems. Cofece claimed jurisdiction over said investigation and a court decided that the commission was empowered to investigate the markets for online search services, social networks and cloud computing services; while the IFT maintained competition in the mobile operating systems market.

collaboration

For Miguel Flores Bernés, a lawyer specializing in economic competition, the investigations of both Cofece and the IFT mean, on the one hand, that the Mexican authorities are catching up on investigations than in other jurisdictions, such as the European, the United States or the Japanese, they have time going on.

It is not surprising. Rather, I think we are behind,” Flores Bernés said in an interview.

Research also shows that both institutions, the IFT and Cofece, are at odds when it comes to dealing with digital economy issues, according to Flores Bernés. This can be solved, according to the analyst, with a conversation between the plenary sessions of both organizations about a possible cooperation in the investigations.

“Unfortunately, the egos of the autonomous constitutional bodies have not helped to solve this problem,” said Bernés and predicted a difficult development of these investigations in Mexican territory, which could end up in court, and which cover two of the largest companies at the level. global.

rodrigo.riquelme@eleconomista.mx