The Balkanization of the app economy


Last week, Facebook rolled out its Instant Games offering, which allows Facebook Messenger users to load games more or less instantly within chat conversations. Along with Facebook’s Instant Articles and Facebook Live offerings, Instant Games creates yet another opportunity for Facebook to bring third-party content to its users without them leaving the Facebook app — a strategy which I describe in detail here (and which I hypothesize will extend to mobile retail).


While the gaming-within-the-messaging-app paradigm is by no means new (Japan’s LINE has featured games for years), it bucks the predominant app store distribution prototype in the West, which is oriented around platform app stores. In fact, popular wisdom dictated until recently that discovery apps — “app stores within the App Store” — were strictly forbidden within the Apple ecosystem, most famously exemplified in the removal of AppGratis from the App Store in 2013. The App Store developer guidelines have changed substantially since that time but nonetheless still explicitly forbid the “app store with the App Store” use case, via clause 3.2.2 (unacceptable business models), point (i):

(i) Creating an interface for displaying third party apps, extensions, or plug-ins similar to the App Store or as a general-interest collection.

Yet it’d be hard to define Facebook Messenger’s Instant Games much differently than an interface for displaying third party apps…similar to the App Store. Instant Games is an app store (for games) within the App Store (and within Google Play, although Google Play is less strict about the app distribution issue), and the launch of Instant Games was publicized to an extent that makes it hard to believe Apple didn’t know about it beforehand.

Thus, Apple seems to be softening its stance on app stores within the App Store; in fact, it launched its own App Store within iMessage with the launch of iOS 10. Stickers, Emoji packs, and Apps can be purchased and downloaded directly from within the iMessage App Store (accessed via the App Store icon on the bottom toolbar of iMessage within a conversation), rendering it an App Store within the App Store.


These developments might portend an important shift in app distribution. The app economy is mature, and it is winner-takes-all: the commercial hierarchy is real and it changes slowly. If the app store within the App Store policy shift becomes explicit at some point, it could incite two major behavior changes within the app economy.

The first is that the biggest developers that are already operating de facto “platforms” via aggressive cross promotion will be much more straightforward about doing so. Clash of Clans and Candy Crush Saga are large brands comprising multiple properties. A Clash of Clans “info center” app is not hard to imagine: a place where players view statistics about their guild, watch videos of recent matches, and generally consume meta content about the games within the Clash of Clans universe, allowing for those games to be downloaded and launched within this app store within the App Store. Ditto for Uber, or LinkedIn, or any number of companies that operate multiple apps within some constrained yet general use case.

The other behavioral change is a potential Balkanization of the app economy. Early “favored app” status can be a kingmaker on ascendant platforms, and that’s obviously no longer probabilistically realistic for the established platforms (iOS, Google Play) given the number of apps released every day by very skilled developers (which is to say: don’t bet your company on featuring, even if your app is excellent). But it would be possible for app stores within the App Store, many of which will be eager to promote a killer app that provides engagement and stickiness to their platform.

Imagining the Uber App Store: what if a local travel guide launches there instead of the App Store, securing featuring (and the auspices of an acquisition) as a big fish in a small pond rather than competing head to head with the countless “local guides” apps on the App Store? It could become a reality that these app stores within the App Store create the kinds of real possibilities for company building that were much more realistic in the early days of the App Store than they are now.