Microsoft offers 'open' app store to draw regulators away from Activision takeover

Windows giant will say anything at this point to protect $69bn deal – and stick boot into Google, Apple

Microsoft, a monopolist of yore that recently disallowed third-party browsers from handling a protocol associated with its Edge browser, has pledged to uphold a set of Open App Store Principles for the Microsoft Store on Windows and future game marketplaces.

"We have developed these principles in part to address Microsoft's growing role and responsibility as we start the process of seeking regulatory approval in capitals around the world for our acquisition of Activision Blizzard," said Microsoft president Brad Smith, in a blog post announcing Redmond's commitments.

Smith acknowledges that regulators around the world are looking to make app markets more competitive, and says that Microsoft wants to demonstrate that it's committed to adapting. In other words, the Windows giant really wants its $69bn deal for Activision Blizzard to be approved (and not do an Nvidia-Arm.) But Microsoft also sees an opportunity to level a playing field dominated by Apple and Google.

Lawmakers in the US and elsewhere are currently debating legislation that would change the competitive landscape for app developers, the mobile market in particular. Last week, for example, the US Senate Judiciary Committee advanced the Open App Markets Act to limit the control that large app store operators like Apple, Google, and Microsoft have over third-party software makers.

At watchdog agencies like the Federal Trade Commission, there's renewed focus on preventing mergers and acquisitions that stifle competition. And there are multiple government-driven lawsuits against large tech firms like Google underway that may reshape online markets.

By publishing its Open App Store Principles, Microsoft appears to be hoping to get out in front of the regulatory wave and shape whatever laws take form. Smith says Microsoft is more focused on adapting to new regulation than fighting it, which he attributes in part to two decades of dealing with the consequences of the US Justice Department's successful antitrust prosecution of the company. 

Indeed, Microsoft has a reputation for being savvier in its dealings with politicians than its rivals, and hasn't been shy in the past about siccing lawmakers on its rivals. 

In the hope of winning approval for its Activision Blizzard purchase, Microsoft has pledged to keep Call of Duty and other Activision Blizzard titles available for Sony Playstation beyond the expiration of the game maker's current deal with Sony.

And it is making other commitments that Apple and Google have resisted in their respective app markets. In fact, Microsoft's Open App Store Principles read like they were cribbed from the Open App Markets Act:

Quality, Safety, Security & Privacy

  • We will enable all developers to access our app store as long as they meet reasonable and transparent standards for quality and safety.
  • We will continue to protect the consumers and gamers who use our app store, ensuring that developers meet our standards for security.
  • We will continue to respect the privacy of consumers in our app stores, giving them controls to manage their data and how it is used.

Accountability

  • We will hold our own apps to the same standards we hold competing apps.
  • We will not use any non-public information or data from our app store to compete with developers' apps.

Fairness and Transparency

  • We will treat apps equally in our app store without unreasonable preferencing or ranking of our apps or our business partners' apps over others.
  • We will be transparent about rules for promotion and marketing in our app store and apply these consistently and objectively.

Developer Choice

  • We will not require developers in our app store to use our payment system to process in-app payments.
  • We will not require developers in our app store to provide more favorable terms in our app store than in other app stores.
  • We will not disadvantage developers if they choose to use a payment processing system other than ours or if they offer different terms and conditions in other app stores.
  • We will not prevent developers from communicating directly with their customers through their apps for legitimate business purposes, such as pricing terms and product or service offerings.

Microsoft is also extending its promises beyond the Microsoft Store into the Windows operating system:

  • We will continue to enable developers to choose whether they want to deliver their apps for Windows though our app store, from someone else's store, or "sideloaded" directly from the internet.
  • We will enable Windows users to use alternative app stores and third-party apps, including by changing default settings in appropriate categories.

Taken as a whole, Microsoft is agreeing to rules that Apple argues will be a disaster.

Apple has suggested sideloading – the ability to install arbitrary apps on iOS devices without going through Apple's App Store – would be a security nightmare, a position echoed by The Chamber of Progress, an advocacy group backed in part by Google. Apple also has fought tooth-and-nail to avoid allowing or accommodating third-party payment mechanisms, in an effort to retain its commission on iOS app sales and in-app purchases.

Over the past year, antitrust scrutiny, lawsuits, and developer protests have encouraged digital store operators to make concessions. Microsoft last year lowered its commission for games sold through the Windows app store from 30 per cent to 12 per cent. Both Apple and Google adopted tiered commission schemes for their mobile app stores that start at 15 per cent for revenue under $1m and rise to 30 per cent after that. And the price pressure has affected cloud services too.

"The idea that Microsoft owes Apple 30 per cent of the revenue from any copy of Office sold on an iOS device puts into sharp relief how ridiculous Apple's App Store rake is," said Dare Obasanjo, a product manager at Meta and former veteran of Microsoft, via Twitter.

Now, it looks like there's a real chance lawmakers will intervene. And Microsoft is okay with a little help from its friends in the US Capitol.

Even so, Microsoft's recent decision to force internal Windows links prefixed with its microsoft-edge: URI scheme to open only in its Edge browser underscores how commitments of this sort still leave room for self-preferencing. ®

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