iOS and Android Under CADE’s Scrutiny: The Future of Competition in Mobile Operating Systems

Concerns were raised regarding artificial restrictions on competition, including high digital transaction fees (up to 30% for developers), app distribution limitations—such as Apple’s exclusive use of the App Store—and barriers to innovation and new technology adoption. Furthermore, the difficulty of switching between ecosystems reinforces the lock-in effect, discouraging competition and solidifying platform control over the digital market.

The main debate explores whether Apple and Google’s practices amount to an abuse of dominance and whether they justify targeted regulatory intervention to promote a more balanced and competitive environment. Companies, app developers, fintechs, and other stakeholders analyzed the impact of these platforms’ policies on innovation, digital security, and market competition.

The following is a summary of the key topics discussed, presenting arguments from both sides and their potential impact on the Brazilian market.

ARGUMENTS IN FAVOR OF THE CURRENT MODEL (APPLE AND GOOGLE)

• Security and Privacy – A closed ecosystem would offer greater protection against fraud and malware, minimizing risks for both users and developers (Apple). Official app stores already adhere to high security standards to prevent the distribution of malicious applications (Google).
• Competition and Consumer Choice – Platform differentiation allows consumers to choose between a more integrated and secure ecosystem (Apple) or a more open and flexible environment, which enables the installation of external applications (Google).
• Economic Impact and Innovation – Substantial investments in research and development would stimulate the digital economy and job creation (Apple). Competition between platforms fosters continuous innovation and expands opportunities for developers (Google).
• Ex Ante Regulation and Potential Negative Effects – Regulatory interventions could lead to unintended consequences, such as increased security vulnerabilities and constraints on innovation (Apple). The forced adoption of sideloading and unrestricted interoperability could undermine user privacy and introduce uncertainties for the industry (Apple).

ARGUMENTS AGAINST THE CURRENT MODEL (DEVELOPERS, FINTECHS, AND REGULATORS)

• High Fees and Restrictions on Competition – Fees of up to 30% on digital transactions in paid apps and in-app purchases create significant barriers for developers and increase costs for consumers, reducing competitiveness in the app market (Epic Games, Match Group, Coalition for App Fairness). Apple counters that 85% of apps on the App Store are exempt from commission fees, and most developers qualify for a reduced 15% rate under the Small Business Program.
• App Distribution Limitations and Self-Preferencing – The exclusive distribution requirement through the App Store on iOS prevents viable alternatives, resulting in a closed and less competitive environment (Epic Games, Match Group, Coalition for App Fairness). Additionally, major platforms prioritize their own services, granting unfair competitive advantages to native apps while imposing higher fees and restrictions on third-party developers (Coalizão Direitos na Rede, Artigo 19). Apple defends its position by stating that strict app review standards enhance security and prevent fraud, citing the removal of 35,000 fraudulent apps in 2023, which could have caused R$10 billion in damages to consumers.
• Impact on the Financial Market and Payment Systems – The restriction of NFC access on iOS devices prevents fintechs and financial institutions from offering competing digital wallets, favoring Apple Pay and stifling innovation in the payments sector (Zetta, Associação Brasileira de Internet – ABRANET). This limitation blocks the adoption of contactless PIX transactions, as Apple mandates the use of its proprietary technology and charges high fees for third-party access (Zetta). Data presented at the hearing indicates that 60% of in-person transactions in Brazil are already contactless, exceeding R$1 trillion in 2024, underscoring the critical role of this technology and the consequences of its restriction (Zetta, ABRANET).
• Interoperability Restrictions and Barriers to Competition – Lack of interoperability between mobile ecosystems makes it difficult for consumers to switch platforms, reinforcing lock-in effects and hindering competition in the app and digital services market (Proteste | Euroconsumers-Brasil, IDEC, Núcleo de Estudos de E-Commerce da FGV).
• Barriers to Innovation in Cybersecurity – Restrictions on access to essential data hinder the implementation of advanced fraud prevention solutions, such as device cloning detection and digital authentication mechanisms. One example is the inability to access users’ email data, a key element for authentication and fraud prevention, which remains inaccessible due to Apple’s policies (FS Security).
• International Regulatory Precedents and the Need for Reform – Regulatory frameworks in the European Union and the United Kingdom have already established limits on the power of major digital platforms, highlighting the need for similar measures in Brazil. The Digital Markets Act (DMA) in the EU and regulatory proposals in the UK seek to increase transparency in app store policies and promote fair competition among developers (Coalition for App Fairness, Núcleo de Estudos de E-Commerce da FGV, Proteste | Euroconsumers-Brasil).
• Market Concentration and Digital Rights – The dominance of big tech companies in digital ecosystems not only limits competition but also restricts the diversity of online voices, impacting fundamental rights such as freedom of expression and access to information (Coalizão Direitos na Rede, Artigo 19).

OUR TAKE: CADE’S LIKELY COURSE OF ACTION

The public hearing strongly reinforced concerns about the current model, particularly regarding high transaction fees, self-preferencing, interoperability restrictions, and payment system limitations. Three key factors suggest that CADE may take action:

• Broad opposition to platform dominance – All participants, except Apple and Google, opposed the current structure of mobile operating systems, citing barriers to innovation, high costs for developers, and artificial restrictions on competition. Whether due to the absence of voices defending the status quo or CADE’s strategic selection of speakers, the hearing clearly signaled a strong inclination toward intervention.
• Alignment with European regulatory trends – CADE has historically adopted a regulatory approach closer to the European Union than the United States. The Digital Markets Act (DMA) established key precedents by curbing self-preferencing, mandating sideloading, and ensuring NFC access. Apple was compelled to open its ecosystem to alternative app stores and third-party NFC access in the EU, and CADE is likely to follow a similar path, particularly in the payments sector.
• Proven track record in regulating concentrated markets – CADE has previously intervened to lower entry barriers in concentrated markets, such as credit card payment processing, leading to greater competition and a more open market. A similar approach could be extended to app stores and digital platforms, promoting greater accessibility and competition.

Given this context, CADE is expected to intensify its investigation into the competitive impact of these practices in Brazil and advance toward restructuring the mobile operating systems market—either through direct competition remedies or by recommending sectoral regulation, particularly in areas such as interoperability, transaction fees, and competition in digital payments.