US bill aims to break up Apple and Google app store monopoly

By Eric Johansson

US senators have introduced a new bipartisan bill aimed at reeling in Google and Apple’s app store dominance. The proposal comes amidst a worldwide regulatory firestorm of lawmakers cracking down on Big Tech firms.

A trio of US lawmakers from both sides of the senate aisle have presented a new bill that would prohibit app store providers from forcing app developers from using their own payment solutions.

Democratic senators Richard Blumenthal and Amy Klobuchar have a long history of having questioned the reach of Silicon Valley. Klobuchar, for instance, introduced an antitrust bill in February which Blumenthal was one of the co-sponsors for. The Competition and Antitrust Law Enforcement Reform Act of 2021 is one of the five bills already making their way through the corridors of Capitol Hill, all aimed at cutting back the influence of Bay Area giants.

For the new bill, they were joined by Republican senator Marsha Blackburn, who co-sponsored the new Open App Markets Act. They made no secret about how the bill should make executives in Cupertino and Mountain View very nervous.

“Big Tech giants are forcing their own app stores on users at the expense of innovative startups,” said Blackburn. “Apple and Google want to prevent developers and consumers from using third-party app stores that would threaten their bottom line. Their anticompetitive conduct is a direct affront to a free and fair marketplace.”

What’s in the Open App Markets Act?

App stores are big business. The proliferation of smartphones mean that almost everyone in the Western world use apps. Last year, US consumers spent nearly $33bn in mobile app stores, according to the lawmakers behind the new bill.

For Apple, its App Store is a cornerstone to its $53.8bn services business. Similarly, Google’s Play Store makes up a significant chunk of the Alphabet-owned company’s $57bn service business.

However, the three senators believe Apple and Google have achieved these results unfairly by acting as gatekeepers for app developers competing for a slice of the market.

“Competition is critical to protecting small businesses and consumers, spurring innovation, and promoting economic equity,” argued Klobuchar. “But as mobile technologies have become essential to our daily lives, it has become clear that a few gatekeepers control the app marketplace, wielding incredible power over which apps consumers can access. This raises serious competition concerns.

“By establishing new rules for app stores, this legislation levels the playing field and is an important step forward in ensuring an innovative and competitive app marketplace.”

They claim the Open App Markets Act would give developers the right to tell consumers about lower prices and offer competitive pricing as well as opening up competitive avenues for startup apps, third-party app stores and payment services.

To that end, the bill would also protect sideloading of apps. Sideloading refers to downloading apps from other places than the official app store. In iOS, that means any apps downloaded outside the App Store. In Android devices, that refers to apps downloaded outside the Play Store. Google allows sideloading but Apple has vehemently fought back against it, arguing that allowing it would be detrimental for data privacy and cybersecurity.

The bill also aims to 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 better protect privacy, security and safety of consumers.

Part of something bigger

The announcement about the Open App Markets Act comes as US legislators are increasingly turning up the heat against Silicon Valley.

“US regulators and lawmakers have been scrutinising the role of these big platforms over the last few years,” Laura Petrone, principal analyst at GlobalData, tells Verdict. “They are ready to intervene now as they have gathered enough evidence that these companies act as monopolies in trying to set the rules governing their own platforms with low or almost absent levels of transparency and accountability. The time is good also because there’s a bipartisan consensus in the Congress that something must be done to reign in digital monopolies.”

And this may just be the beginning. A recent GlobalData report notes that regulators around the world are putting the screws to Big Tech firms on issues like antitrust, data privacy, online harm, tax avoidance and misinformation.

“[We’ve] seen Apple’s business model being mainly scrutinised by European regulators over the last few years, to the extent that the EU launched a twin antitrust investigation on Apple’s App store and Apple Pay in 2019-2020,” Petrone says.

“But the tide is turning now and the US is joining the EU on this: the Department of Justice and a coalition of state attorneys took the first steps last year towards launching an antitrust probe of Apple, similarly to the lawsuit launched against Google earlier in 2020. The new legislation in the US is only at a proposal stage now, but it shows a firm commitment to reign in these companies’ app store structures and payment systems.”

Epic welcomes

Of course, it’s not just regulators who’ve been pursuing Apple and Google for their app store antics over the years. Several companies have also taken action against the two tech giants.

Some, like Spotify, have complained to the European Commission about perceived unfair rules on the app stores. In Europe, this has led to the European Commission having launched antitrust probes against Apple.

Others, like Fortnite video game developer Epic Games, have taken both Apple and Google to court over what it perceives as anti-competitive rules in their app stores, especially the 30% cut these companies take for revenue apps generate.

Unsurprisingly, both Spotify and Epic were among the industry stakeholders who welcomed the new app store bill, Reuters reported.