The market power of the two tech giants in the popular world of smartphone apps is the focus of a new report issued by the Australian Competition and Consumer Watchdog, part of its five-year Digital Platform Services Inquiry.

The report warns Apple and Google face the possibility of regulation if they do not choose to act on its recommendations to address the power imbalance.

Apple and Google both operate popular stores which are the avenues most Australians use to download the apps they use to socialise, shop, play, entertain themselves, and carry out important tasks like banking.

IPhone users can only access apps via Apple's App Store, and Google's Play Store is the main source of apps for Android phones.

"Apple and Google's stores are the gateways between consumers and app developers, and it's true that they provide considerable benefits to both groups. But there are significant issues with how this market is operating," ACCC chair Rod Sims said on Wednesday.

Apple and Google run the app marketplaces, but also operate their own apps within them.

"They have the ability and incentive to promote their own apps over others, and they control the terms that their competitors must comply with to gain access to their stores," Mr Sims said.

App developers should get more information about how their apps are made available to users, and Google and Apple shouldn't be able to use data collected from their to advantage their own apps, the ACCC says.

Consumers should have the power to change or remove pre-installed or default apps on their phones.

Mr Sims is also drawing attention to restrictions imposed by Apple and Google which force developers to use the mega-corporations' own payments systems for in-app purchases.

The watchdog is calling on the tech giants to do more to help consumers who are harmed by malicious apps that use scams or subscriptions traps.

Epic Games, the app operator in a multi-national legal fight with Apple and Google over market power, welcomed the release of the review, which a spokesperson said "spotlights the need for competition in payments and fairer, more transparent policies across mobile platforms".

A US court will next week start hearing a lawsuit between Epic, which owns the game Fortnite, and Apple over Apple's market power.

Epic has filed similar suits in Australia against Google and Apple, though the Federal Court recently issued a stay on the Apple case.

Mr Sims encouraged Apple and Google to consider his recommendations.

"There is a window of opportunity for Apple and Google themselves to take steps to improve outcomes for app developers and consumers by adopting the potential measures we have identified," Mr Sims said.

Otherwise, the report warns, government intervention might be necessary.

Apple said its App Store was home to nearly two million apps, "all of which meet Apple's rigorous standards of privacy, security and content, offering our customers a safe and trusted place to download apps".

"This unwavering commitment to bringing our customers the best experience is applied equally and evenly to all, including Apple's own apps," the company said.

"We welcome the opportunity to continue this discussion with the ACCC."

Australian Associated Press