On Wednesday, a new bipartisan antitrust legislation that targets Apple’s App Store and Google’s Play Store, was introduced by three U.S. Congress members, in a first attempt to change how app stores are dominated by Google and Apple operate.
US Senators Richard Blumenthal (D-Conn.), Marsha Blackburn (R-Tenn.), and Amy Klobuchar (D-Minn.) introduced their Open App Markets Act.
“Google and Apple have gatekeeper control of the two dominant mobile operating systems and their app stores that allow them to exclusively dictate the terms of the app market, inhibiting competition and restricting consumer choice,” the lawmakers said.
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The legislation applies to companies that own or control an App Store with more than 50 million users, and it would prohibit Apple from forcing developers to use its own in-app purchase system, allowing developers to distribute apps through alternative app stores.
The summary of the legislation highlights the government’s concern over Google and Apple’s dominance which has stifled competition and gives smaller players a little or no say in the app market. The summary of the legislation is as follows:
The Open App Markets Act would protect developers’ rights to tell consumers about lower prices and offer competitive pricing; protect sideloading of apps; open up competitive avenues for startup apps, third party app stores, and payment services; make it possible for developers to offer new experiences that take advantage of consumer device features; give consumers more control over their devices; prevent app stores from disadvantaging developers; and set safeguards to continue to protect privacy, security, and safety of consumers.
It would also prohibit the app-store operators from requiring developers to use the Apple and Google in-app payment systems and from imposing terms that block or penalize developers who offer the same app at a different price elsewhere. Apple and Google also would not be allowed to prefer their own apps in search “unreasonably,” which is defined as “applying ranking schemes or algorithms that prioritize apps” simply because they are owned by Apple and Google or their business partners. Clearly disclosed advertising is exempt from that provision.
To help third-party software developers, the bill says Apple and Google must provide “access to operating system interfaces, development information, and hardware and software features” to developers “on a timely basis and on terms that are equivalent or functionally equivalent” to the terms that apply to Apple and Google or their business partners.
Violations of the bill would be considered unfair methods of competition under US law. The Federal Trade Commission, US attorney general, and state attorneys general would be able to sue companies over violations. Developers who are “injured by reason of anything forbidden in this act” would be able to sue the companies for damages and injunctive relief.
A group funded by Apple and Google sent a statement to the media claiming that the proposed law “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.”
The statement came from the “Chamber of Progress,” which calls itself “a new center-left tech industry policy coalition promoting technology’s progressive future.”
“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,” said Chamber of Progress CEO Adam Kovacevich, who was formerly a longtime Google lobbyist.
In a separate statement, Apple defended its app store practice, saying that “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,” while Google has pointed out that Android is more open to app stores and sideloaded apps than iOS. But despite Android’s openness relative to iOS, 36 states sued Google last month, claiming it worked to “preemptively quash” competing app stores.
Blackburn said that “Apple and Google want to prevent developers and consumers from using third-party app stores that would threaten their bottom line,” while Blumenthal said the two companies “have squashed competitors and kept consumers in the dark—pocketing hefty windfalls while acting as supposedly benevolent gatekeepers of this multi-billion dollar market.”
“This legislation will tear down coercive anticompetitive walls in the app economy, giving consumers more choices and smaller startup tech companies a fighting chance,” Blumenthal said.
Last month, after the 36 states filed their antitrust lawsuit against Google, it called the complaint meritless and said it is “strange that a group of state attorneys general chose to file a lawsuit attacking a system that provides more openness and choice than others.”
For developers and many app users, the legislation is long overdue. The “Coalition for App Fairness,” with members such as Spotify, Epic Games, Match Group, Basecamp, ProtonMail, and Deezer, are all backing the Open App Markets Act, hoping it would ease the monopolistic policies that have sometimes landed them in court.
“The Open App Markets Act would fix a broken app marketplace by barring app stores from requiring apps to use their in-app payment systems, through which they charge exorbitant fees and block communications between developers and their own customers,” the group said. “It would also strengthen consumer freedom by allowing people to choose and install the app store and default apps that make the most sense for them and easily delete preinstalled apps they don’t want to use.”
The legislation is one in many antitrust issues Google and Apple are facing. The speedy response from Google and Apple shows the impact the bill will have on their app operations if it becomes law will be immense – it will be the end of app store duopoly.