Biparty bill targets Apple and Google’s ability to profit from app stores

A new bipartisan bill announced Wednesday aims to increase competition in the app store market currently dominated by Apple and Google.

The Open App Markets Act, led by Sens. Marsha Blackburn, R-Tenn., And Richard Blumenthal, D-Conn., And Amy Klobuchar, D-Minn., Would disrupt the business model of both companies’ app stores and the structure of their mobile operating systems.

The bill targets, in part, integrated payment systems for businesses that have app stores with more than 50 million users in the United States. According to the bill, companies like Apple and Google would not be allowed to condition the distribution of an app on their app. stores to find out if developers are using their in-app payment system.

They would also be prohibited from preventing developers from communicating with app users about “legitimate business offers” or punishing developers for using different pricing terms through another system. The developers complained that they could not advertise lower prices that customers could receive for apps, which would allow them to bypass App Store fees.

The bill would seek to prevent app stores from disadvantaging certain developers and allow third-party app stores. While third-party app stores are available to Android users from Google, Apple only allows app downloads through its own store.

The bill would also allow apps to be sideloaded, meaning they don’t need to be downloaded from an official app store. Apple in particular has expressed concern that sideloading could open up consumers’ phones to security holes.

The legislation gives platforms the opportunity to argue that its integrated payment system and other tools or protocols are necessary for security purposes. The bill states that any platform covered by the legislation would not be in violation if action is necessary for user privacy or security, a fraud prevention effort, or a means of complying with federal law. or state.

App developers have complained to Congress and the courts that Apple and Google maintain a tight grip on their businesses by controlling their app stores, which are the gatekeepers of consumer access to mobile apps. Companies like Epic Games and Spotify have challenged companies’ commissions on purchases customers make in their apps.

For example, Apple would take 15-30% off the payment made by a customer for upgrading to Spotify Premium through the iOS app. Apple also blocked companies from advertising through its apps so that customers could get lower prices by buying through a different channel so the developer could avoid the fees.

Apple and Google claim that the commissions they charge for app purposes are standard for the market and that it costs money to build and manage the app stores they operate. Many developers say they’re not opposed to paying a fee to cover those costs, but the current fees are unreasonably high.

The developers have also made claims that app store operators are using knowledge of their markets to compete with them. For example, Spotify has been one of the fiercest opponents of Apple, which has its own competing music streaming service. Spotify has accused that Apple “consistently rejects bug fixes and app enhancements that would improve user experience and app functionality” while refusing to put such “obstacles” in front of its own service.

The Open App Markets Act would prohibit large app store operators from using non-public business information from a third-party app to compete with it. It would also prohibit these companies from “preferring or unreasonably ranking” its own applications or those of its business partners before others.

Under the bill, the Federal Trade Commission and state attorneys general could take action against the platforms. Developers would also have the right to seek an injunction.

Apple and Google representatives were not immediately available for comment.

Corie Wright, vice president of public policy at Epic Games, who is currently engaged in litigation with Apple and Google over their app stores, said the bill’s introduction is an “important step in the the struggle continues for fairer digital platforms “.

“Its passage would allow developers to seek injunctions for violations of the law, which will help level the playing field for small businesses facing monopolies that abuse their market power,” Wright said. “This will make it easier for developers of all sizes to challenge these harmful practices and seek relief from retaliation, whether in litigation or simply because they dared to speak out. “

Spotify chief legal officer Horacio Gutierrez also praised the bill in a statement.

“These platforms control commerce, information and communication more than ever, and the power they wield has enormous economic and societal implications,” he said. “This is why we urge Congress to pass the Open App Markets Act quickly. In the absence of action, we can expect Apple and others to continue to change the rules in favor of their own. services, and cause further harm to consumers, developers and the digital economy. “

This story is developing. Check back for updates.

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