A policy toolkit for the app economy

Information and communications technology has made substantial contributions to productivity growth, and productivity growth is the only sustainable source of income and leisure growth. The smartphone’s ubiquity and growth in apps means that mobile devices are now the key enablers of this economic and social progress.

Europe has done well in terms of mobile-apps. It is on track to near universal smartphone adoption, and app developer revenues are a third of the global total. App economy jobs in Europe have been estimated at 1.64 million.

However, the larger prize is the effective use of mobile apps to improve economic and social outcomes – these benefits can often dwarf developer revenues. The digitisation of ‘offline’ parts of the economy – such as home heating and transportation – by mobile apps has the potential to be truly transformative, and offer significant benefits to consumers and to society.

Yet new approaches may threaten existing interests and prove incompatible with rules adapted to past technology and business models, as has been illustrated by the rise of the peer to peer and sharing economies. Regulation is frequently unable to keep pace with technological transformation, and outdated rules may inhibit or prevent digitisation.

Given the scope for mobile apps to transform previously offline activity, a review of the rules throughout the economy (rather than just the digital sector – which is and will remain comparatively small) should be a key part of digital policy. In deciding what form of regulation is appropriate throughout the economy account should be taken of market governance, and the potential for platforms to overtake the role of regulation in safeguarding consumers.

This report assesses the growth of mobile and apps, placing it in the context of the wider app and hardware ecosystem. It considers the potential of the app revolution as the latest wave of ICT-fuelled productivity growth, and suggests guiding policy principles that can help to deliver this growth.