2. Februar 2023
In our last post, we delved into the operating systems (OS) of the metaverse that are vital to the functioning of the virtual reality. If you missed that post, you can find it here.
After tackling with the hardware and the operating systems, we now want to move up one level today and touch upon with the markets of the app stores of the metaverse.
We have to take into account two different perspectives when defining the markets for app stores: The OEMs of smart devices, which can choose between different app stores for their devices on the one hand and developers and end users on the other hand. In this article, we want to focus on the OEM perspective. In the next article we will have a look at the developers and end users.
When examining the app store markets from an OEM perspective, we can continue sticking with the considerations of the European Commission's decision in the Android case (Case AT.40099 - Google Android), as we had done in our last post. As regards the different tools to define the relevant markets, see our first article.
Let's dive in!
Most of you (if not all of you) will already know what app stores are.
The European Commission defines app stores as "digital distribution platforms, constituted by online services and related apps that are dedicated to enabling users to download, install and manage a wide range of diverse apps from a single point in the interface of the smartphone" (Case AT.40099 para 86).
For us users, app stores are generally free of charge; we only have to pay for some of the apps in the stores. According to unconfirmed reports, OEMs have to pay up to EUR 40 per device for services such as the Google Play Store.
And of course, the metaverse has its own app stores, too. To be more precise: VR headsets support app stores for the metaverse. For example, Meta offers its Oculus Quest Store with over 400 apps, of which more than 120 have a turnover of more than USD 1 million. In other words, up to this point, VR headsets app stores differentiate very little from the smart mobile devices we know.
Let´s see how the European Commission defines the markets for app stores from an OEM perspective in its Android decision (a.) and what we can learn from that for the market of app stores for the metaverse (b.):
First, the European Commission distinguishes markets for app stores for PCs from those for mobile devices (Case AT.40099 footnote 38). Because app stores for PCs are built to allow users to download software for PCs and not for smart mobile devices, they do not belong to the same product market as app stores for smart mobile devices. So far so good.
Second, the European Commission examines the markets for app stores in the smart mobile sector.
What can we learn from that decision for the markets for app stores for the metaverse from an OEM’s perspective?
The markets of app stores are, comparable to the markets for OS, worldwide in geographic scope.
There are essentially no hurdles to offer app stores worldwide. App stores, as well as OSs, are available worldwide. Additionally, from a supply-side perspective, programming languages are, without exception, identical in all countries. There is no (relevant) local programming language. Only language barriers may pose as a difficulty. The European Commission also sees few language barriers (Case AT.40099 para 414).
OEMs in China, however, have developed their own app stores for smart mobiles. The top five app stores in China were in 2018: Myapp, 360 Mobile Assistant, Baido Mobile Assistant, MIUI app store and Wandoujia, which are all not successful outside of China (Case AT.40099 para 418). The European Commission states that those OEMs that pre-install Chinese app stores on devices sold in China, pre-install the Google Play Store on all other devices sold in the rest of the world (Case AT.40099 para 420). However, one of the biggest competitors of the Meta Quest headsets is the Pico headset, developed by the Chinese company ByteDance (TikTok). Pico headsets have an own app store (Pico VR Store), which seems to be identical for all users, regardless of their location. As a result, the situation for app stores for VR headsets could be different to app stores for other smart mobiles, but we have to track future developments on these markets.
The European Commission's decision was largely upheld by the General Court of the European Union (Case T-604/18), in particular with a view to the market definition of app stores (Case T-604/18, para 235). Google has appealed against the decision. We will keep you updated on the ruling, as far as it relevant for market definitions for the metaverse.
Another interesting point regarding app stores could be the Digital Markets Act, which comes into force in the middle of this year. Art. 6 (1) c) Digital Markets Act could result in having Gatekeepers to open app stores (and their OS) to third parties, if these are qualified as core platform service. Whether this provision will apply to Meta and other OEMs of VR headsets with regard to their app stores remains to be seen in the future.
We will deal with the DMA in a later article of our blog. If you would like to read something about the Digital Markets Act today, you can find a good summary here.
The world is meeting up in the metaverse, only Germany isn’t there yet?
15. December 2022