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US senators propose new laws to end Apple and Google’s unpopular app store rules

By | Published on Thursday 12 August 2021

Apple

Three senators in US Congress yesterday unveiled proposed new laws that would regulate the Apple and Google app stores, tackling many of the issues raised by many app-makers – not least Spotify and Fortnite owner Epic Games – which have accused the tech giants of anti-competitive behaviour in this domain.

The Open App Markets Act has been proposed by senators Richard Blumenthal, Marsha Blackburn and Amy Klobuchar, and would force Apple and Google to allow app-makers to use and sign-post alternative payment platforms within their apps, making it easier to circumvent Apple and Google’s own commission charging transaction systems.

Both Spotify and Epic have been very vocal in their criticism of Apple and Google’s app store rules in recent years, arguing that policies that favour and/or enforce the app store owners’ proprietary payment systems are anti-competitive.

When using those systems to take payments through their apps, Spotify and Epic have to pay Apple and Google a commission fee of up to 30%. For Spotify in particular that’s a big problem, given it has already committed to share up to 70% of its revenues with the music industry.

Spotify can – and does – circumvent that problem by having people subscribe via its own website, so that – while a user may access the music service via an iOS app – no transaction ever takes place there. However, Apple rules say that Spotify can’t overtly direct people to its own payment website through its app, making it much harder to upsell premium products to free users, which – of course – is a key element of the streaming firm’s growth strategy.

In Europe, Spotify has been fighting Apple’s App Store rules via the regulatory system, filing a complaint with the European Commission. In the US, to date, it has been mainly Epic that has gone to war over the rules, it suing both Apple and Google through the courts in California.

With regards the Epic litigation, the Apple case has already been heard in court, with judgement pending. The Google case is still going through the motions, with both sides currently squabbling over what, if anything, should be redacted from Epic’s amended complaint before the gaming firm’s new legal papers are made public. Google argues that that amended complaint contains statements that reveal its “confidential business strategies”.

Back in Congress, Blumenthal said yesterday that the proposed Open App Markets Act would “tear down coercive anticompetitive walls in the app economy, giving consumers more choices and smaller start-up tech companies a fighting chance”.

“For years”, he added, “Apple and Google have squashed competitors and kept consumers in the dark – pocketing hefty windfalls while acting as supposedly benevolent gatekeepers of this multi-billion dollar market. I’m proud to partner with Senators Blackburn and Klobuchar in this breakthrough blow against big tech bullying. This bipartisan bill will help break these tech giants’ ironclad grip, open the app economy to new competitors, and give mobile users more control over their own devices”.

If passed, the new laws would stop Apple from obliging app-makers to use its proprietary payment system or even its proprietary App Store. Any rules that stop app-makers from communicating alternative payment options to their consumers would be outlawed, and Apple wouldn’t be allowed to give its own apps preferential treatment in any App Store searches.

Google’s current rules are not quite as strict as Apple’s, though the new laws would also force changes in the way it manages apps within the Android operating system.

Needless to say, both Spotify and Epic have welcomed the proposed new laws. The former’s Head Of Global Affairs and Chief Legal Officer, Horacio Gutierrez, said on Twitter: “Thank you Amy Klobuchar, Richard Blumenthal and Marsha Blackburn for introducing the Open App Markets Act and for your courage and resolve in holding Apple and other gatekeeper platforms accountable for their unfair and anti-competitive practices”.

“These platforms control more commerce, information and communication than ever before, and the power they exercise has huge economic and societal implications”, he went on. “We urge Congress to swiftly pass the Open App Markets Act. Absent action, we can expect Apple and others to continue changing the rules in favour of their own services, and causing further harm to consumers, developers, and the digital economy”.

Corie Wright, VP Of Public Policy at Epic Games, meanwhile, said: “The introduction of this bill is an important milestone in the continued fight for fairer digital platforms. Its passage would enable developers to seek injunctions for violations of the act, which will help level the playing field for small companies standing up to monopolists who are abusing their market power”.

But, also needless to say, Apple and Google will lobby hard against the proposals, presenting their app store policies as being all about user safety and security, and having nothing to do with gaining competitive advantage for their own apps.

Lobbying group Chamber Of Progress, which counts both Apple and Google among its membership, has already spoken out. It’s CEO Adam Kovacevich said yesterday: “This bill is a finger in the eye of anyone who bought an iPhone or Android because the phones and their app stores are safe, reliable, and easy to use. I don’t see any consumers marching in Washington demanding that Congress make their smartphones dumber. And Congress has better things to do than intervene in a multi-million dollar dispute between businesses”.

Apple itself didn’t directly attack the proposals, but nevertheless defended its App Store policies, telling reporters: “Since our founding, we’ve always put our users at the centre of everything we do, and the App Store is the cornerstone of our work to connect developers and customers in a way that is safe and trustworthy”.

“The result”, they added, “has been an unprecedented engine of economic growth and innovation, one that now supports more than 2.1 million jobs across all 50 states. At Apple, our focus is on maintaining an App Store where people can have confidence that every app must meet our rigorous guidelines and their privacy and security is protected”.



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