Behind the Walls: How Smartphone Platforms Are Breaking Free
The legal status of "walled gardens" in digital ecosystems, especially regarding smartphone platforms, has emerged as a significant area of discussion in modern competition law. Companies such as Apple and Google have, for more than a decade, argued that their tightly controlled ecosystems are necessary for security, privacy, and consistent user experience. Regulators and courts increasingly view such closed architectures as potential forms of monopolies that can foreclose competition, raise switching costs, and restrict innovation. The legal framework and the economic theories employed to assess digital markets are thus undergoing rapid and consequential evolution. This dynamic recognizes a growing appreciation of the fact that traditional approaches to antitrust, often oriented around price effects, single-product markets, and after-the-fact enforcement, are inadequate to understand and regulate the complex dynamics of modern platform ecosystems.
Historically, walled gardens were largely tolerated under antitrust law. US courts regularly applied the rule of reason to app store restrictions, accepting that limits on distribution and payment were justified by legitimate business interests in protecting users from malware or ensuring system integrity. The early landmark case Epic Games v. Apple is illustrative of this judicial stance. In that case, Epic attacked Apple's rules mandating that apps be distributed exclusively through the App Store and requiring the use of Apple's in-app payment system. However, the district court largely rejected Epic's federal antitrust claims, defining the relevant market as "digital mobile gaming transactions," in a broad sense, including both the iOS and Android platforms. Because the framing was so broad, Apple was not considered a monopolist within that market. Furthermore, the court accepted Apple's security and privacy justifications as credible pro-competitive benefits. On appeal, the Ninth Circuit largely affirmed this reasoning, concluding that Apple exercised significant control over its ecosystem but did not meet the federal standard for monopolization. This approach reflected a longstanding judicial discomfort with treating single-brand ecosystems as standalone markets unless there were clear indications of consumer unawareness or coercion.
That tolerance has sharply eroded in recent years. A decisive moment occurred in Epic Games v. Google, brought against Google's Android ecosystem. Unlike Apple, Google had long argued that Android was open because it allowed sideloading and third-party stores in theory. But evidence in the case showed that Google allegedly engaged in contractual and financial tactics to discourage alternative stores and incentivize manufacturers and developers to rely on Google Play. In December 2023, a federal jury found Google liable for anticompetitive conduct in two narrowly defined markets: Android app distribution and Android in-app billing. This was a significant departure from earlier broad market definitions. A further breakthrough arrived in 2025 when the Ninth Circuit upheld the verdict and an injunction requiring Google to allow third-party app stores, permit alternative payment systems, and provide equal access to Play Store content. This remedy was not a simple fine but a structural and operational re-configuration of how Android must function. Its significance lies in the court's recognition that digital platforms are multi-sided markets, and that restricting competition on one side, even when the product is nominally free to users, can constitute unlawful monopolization.
Parallel to developments in U.S. litigation, regulatory frameworks in other jurisdictions have shifted even more dramatically. The European Union’s Digital Markets Act, or DMA, which became fully applicable to major platforms by 2024, represents a radical move from ex post enforcement to ex ante regulation. Rather than waiting for market abuses and litigating them one case at a time, the DMA designates dominant platforms as “gatekeepers” and imposes upfront obligations. For smartphone platforms, this includes requirements to allow third-party app stores, permit sideloading, enable alternative in-app payment mechanisms, and prohibit self-preferencing. In practice, this has forced Apple and Google to open components of their ecosystems that had previously been tightly controlled. The rationale for the DMA rests on the belief that once a platform reaches a certain scale and entrenches network effects, competitive harm becomes systemic and cannot be effectively remedied after the fact. The DMA therefore represents a broader philosophical shift: ensuring competitive structure, rather than reacting to individual abuses.
These legal developments are intertwined with a major evolution in how market definition and monopoly theory are understood in digital contexts. Traditional antitrust analysis places great reliance on the definition of the relevant market, considering mainly price competition and consumer substitution. But smartphone platforms represent paradigmatic multi-sided markets, where developers, consumers, advertisers, payment processors, and hardware manufacturers interact. Harms can manifest in reduced innovation, restricted access, suppressed alternative business models, and less consumer choice, none of which necessarily show up as increased prices. The evolving economic literature recognizes that the platform owner's ability to control developer access, distribution terms, and default settings can have competitive consequences equivalent to traditional forms of market dominance. And this insight is reshaping legal doctrine, as courts show themselves increasingly willing to treat a closed ecosystem not just as a product but as an infrastructure through which other markets operate.
Another significant development involves the increasing recognition of non-price harms: competition agencies and courts increasingly review conduct creating barriers to entry, reducing interoperability, or otherwise locking in users and developers. Within this analytical framework, the requirement to use mandatory in-app billing, the prohibition of steering users to external payment options, or even design choices that place third-party services at a disadvantage can be anticompetitive even when the consumer pays nothing. This is expanding the realm of possible liability and offering a theoretical foundation for those digital practices that, until recently, fell outside the reach of conventional antitrust analysis.
These changes have far-reaching practical consequences. For the owners of platforms, long-entrenched business models based on closed distribution and high commission fees are being put under sustained pressure. Apple and Google need to consider how to comply with regulatory obligations in some jurisdictions while litigating in others, all while maintaining security and user trust. Developers may gain from increased distribution options, lower fees, and greater control over how they reach consumers. Users may benefit from heightened competition, increased payment options, and reduced lock-in. However, they also might be exposed to new risks or inconsistencies if third-party stores proliferate without uniform safeguards put in place.
A further challenge comes from global regulatory fragmentation. The EU's DMA is today's most aggressive and comprehensive regime, while the United States proceeds primarily through litigation and proposed legislation that has not yet been enacted. The United Kingdom and other jurisdictions occupy positions between these models. This patchwork means that platforms may need to adopt region-specific practices, offering sideloading in Europe but not in North America, for instance, which can create complexity both for developers and for consumers. Over time, platforms may decide that harmonizing globally around the most restrictive rules is preferable to operating divergent regional systems, but that still remains uncertain.
Ultimately, this evolution of the legal status of walled gardens reflects a deeper tension in digital markets. The platforms believe that closed systems guarantee safety, privacy, and quality control, while regulators believe these justifications can mask strategies that suppress competition. Courts and policymakers are increasingly striving to balance these competing concerns by requiring openness in ways that meaningfully enhance competition without compromising security through targeted safeguards. The broader question of how much control platform owners should have over the digital ecosystems they built and popularized remains contested, but central to the future of the digital economy.
Taken together, the combination of evolving legal doctrine, assertive regulatory frameworks, and successful recent litigation suggests that the era of unquestioned, fully closed digital ecosystems is nearing an end. The shift does not mean that walled gardens will disappear entirely, but rather that they will be subject to oversight and constraint, especially when considering competing interests in innovation, competition, and consumer choice. As courts, regulators, and platforms continue to navigate these issues, the architecture of the digital world and the distribution of power within it may change more in the next decade than in the previous one.
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