US Senators out to tear down the app store walls

A bipartisan Senate bill is introduced to boost competition in the mobile apps market with rules to restrict what Apple and Google can impose on developers and users.

Senators Marsha Blackburn (R-Tenn.), Richard Blumenthal (D-Conn.), and Amy Klobuchar (D-Minn.) introduced a bill to set new rules for the mobile application store operators, primarily Apple and Google, on what they can and cannot dictate. The bill aims at loosening the duopoly’s grip on the channels apps can distribute through, what apps can appear on the stores, and how mobile users can install them.

The full title, “To promote competition and reduce gatekeeper power in the app economy, increase choice, improve quality, and reduce costs for consumers” makes the objective of the bill explicit. Shortened as “Open App Markets Act”, the bill listed what the legislators view as abuses by Apple and Google of their competition stifling power. These include Apple preventing third-party app stores to be created on iPhones; restricting payment to be made using their own payment system, on which they charge high commissions; and penalising developers for telling users about discounted offers.

App stores have been in the centre of many a dispute over the last couple years, from monopoly accusations lodged by developers like Epic and Spotify, to unilaterally removing apps deemed offensive either by certain governments or by themselves. In all fairness the wall guarding the Apple App Store is built much taller and more solid. Unless they jailbreak, or “brick”, their iPhone, in which case they would forfeit any warranty, users would not be able to legitimately install apps not carried in the official App Store.

Apple defended itself in a statement, claiming that App Store has been “the cornerstone of our work to connect developers and customers in a way that is safe and trustworthy. The result has been an unprecedented engine of economic growth and innovation.”

There is no denial that the App Store ecosystem has definitely delivered strong “economic growth” to Apple itself: for a long time Apple would charge 30% on digital sales through its app and content stores, until it changed the policy recently to take 15% on sales by companies that make less than $1 million. Apple does not disclose how much revenue its app store generates, but claimed it had cumulatively paid out $200 million to developers by the end of 2020.

Google, on the other hand, has more ground to defend itself, largely thanks to its different business model from Apple’s. Android device makers can preinstall apps of their choice (Samsung was aggressively preloading many apps of its own that competed with Google’s default apps, but has largely rolled back recently, after being called “bloatware”). They can also choose to use other app stores alongside Play Store. Users can also choose to install apps from the developers’ own website though there would appear a risk warning before the installation can go ahead.

To counter the strong-handed measures adopted by Apple and Google, the proposed legislation would demand two giants to “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.”

“Big Tech giants are forcing their own app stores on users at the expense of innovative start-ups,” said Senator 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.”

“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,” said Senator Klobuchar. “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.”

“This legislation will tear down coercive anticompetitive walls in the app economy, giving consumers more choices and smaller startup tech companies a fighting chance,” said Senator Blumenthal.

The analogy in Senator Blumenthal’s comment is obvious, and, intentionally or unintentionally, it appeared on a historically appropriate occasion. Sixty years ago, almost to the day (13 Aug 1961), barbed wires and concrete poles were used to separate Berlin. They then evolved into the world’s most famous wall in the 20^th century. In the summer of 1987 President Ronald Reagan famously called on his Soviet counterpart to “tear down this wall”. Two and a half years later, the wall fell.

It would be preposterous to liken what the three Senators set out to do to what Reagan was trying to do (or Apple and Google to Stasi for that matter), but it would be highly pertinent for the mobile industry to keep a keen eye on how far this new legislation proposal can go and if it can crack and tear down the digital walls it targets.