The US Senate Judiciary Committee on February 3 gave the go-ahead for the Open App Markets Act that will force Google and Apple to open up their app stores to alternative payment processing systems and allow app downloads from non-official sources.
The bill still has to go for a full Senate vote, but the 21-2 bipartisan vote in the Senate Committee indicates growing support among US lawmakers for laws targeting Big Tech. Just last month, the same committee voted to pass another tech antitrust bill called the American Innovation and Competition Act, which accomplishes some of the same goals as the Open App Markets Act while targeting a wider set of anticompetitive practices and tech companies.
Senator Richard Blumenthal, who co-sponsored the Open App Markets Act, said:
“Breaking Apple and Google’s ironclad grip on the multi-billion dollar app market will stop their predatory fees on consumers and barriers to start ups and rivals. The Open App Markets Act will lower charges and spur innovation while preserving privacy and security. Despite self-interested opposition, our bipartisan success reflects the American public’s view that the online app market is exploited by monopolistic gatekeepers and needs reform.”
The US is not the only country going after app stores. The UK, EU, Russia, South Korea, and India are among many others looking into whether Google and Apple have a monopoly in the distribution of apps and in-app payment systems.
What does the bill propose?
The Open App Markets Act, which was first introduced in August last year, says:
- Operating systems must allow third-party app stores: The bill stipulates that Google and Apple must allow sideloading, which is to allow users to download third-party app stores through means other than their own app stores. Users should also be allowed to choose third-party app stores as default and to hide or delete preinstalled app stores. Currently, Google allows third-party app stores with some restrictions, but Apple does not.
- Developers are allowed to choose their choice of in-app payment system: The bill stipulates that developers cannot be forced to use the payment systems owned or controlled by Apple and Google for in-app purchases. Currently, Apple and Google require apps to use their proprietary payment system and charge anywhere between 1o-30 percent commission. But with developers allowed to freely choose their in-app payment system, they can direct the user to payment systems that charge less commission.
- Pricing for various app stores or in-app payment systems can be determined by developers: Google and Apple cannot require developers to price apps to be equal or more favourable on their app stores than other app stores. These platforms also cannot take punitive action or otherwise impose less favourable terms and conditions against a developer for offering different pricing in another app store or in-app payment system. This rule ensures that if a developer is able to offer the app at a cheaper rate on another app store because of a lower commission, they can do so without facing any repercussions.
- Developers can freely communicate pricing offers with users: Apple and Google cannot impose restrictions to prevent developers from reaching their apps’ users for business offers, pricing terms, product or service offerings. Currently, Apple does not allow apps to show notifications to users asking them to directly pay on their website.
- Google and Apple cannot use non-public data to build competing apps: The bill stipulates that Google and Apple cannot use non-public business information derived from a third-party app for the purpose of competing with the app. Recently Tile, which makes tags to find lost objects, complained that once Apple made its own such tags it began making it more difficult for Tile products to work on Apple devices. Other apps have also complained about how Apple launched its own competing apps and pre-installed them on devices, making it harder for third-party developers to survive in the market.
- No self-preferencing in app stores: Apple and Google cannot give more preference to their own or their business partners’ apps and services over third-party ones in app store rankings.
- Third-party developers must be provided with the same access to developer tools: Apple and Google must give all developers the same access to operating system interfaces, development information, and hardware and software features that it gives to its own apps or its business partners.
What about the security and privacy of users?
In a letter sent to the Senate Judiciary Committee last week, Apple urged the committee to reject the bill arguing that:
“Sideloading would enable bad actors to evade Apple’s privacy and security protections by distributing apps without critical privacy and security checks. These provisions would allow malware, scams and data-exploitation to proliferate.”
Google, too, objected to the bill stating:
“This bill could destroy many consumer benefits that current payment systems provide and distort competition by exempting gaming platforms, which amounts to Congress trying to artificially pick winners and losers in a highly competitive marketplace.”
The US Chamber of Commerce also wrote in support of the two companies saying the bill “would greatly increase the risk that users would unintentionally and unknowingly download malware” and “antitrust law should promote competition, not predetermine marketplace behaviors and outcomes.”
The Senate Committee members took into account these arguments and included an amendment in the bill clarifying that the companies can impose user privacy and security requirements on app developers, which will not be considered to be in violation of the law. The members also said that they consulted privacy and cybersecurity experts who disagreed that the bill will harm users privacy and security.
Five other bipartisan bills aimed at breaking up big tech
In June last year, US lawmakers debuted five bipartisan draft bills that are aimed at curbing the power of tech giants like Apple, Google, Facebook, and Amazon. One of these is the American Innovation and Competition Act which was passed by Senate Judiciary Committee last month.
The bills are aimed at preventing dominant companies from unfairly disadvantaging rivals, preventing companies from owning a platform and offering services on it that pose a conflict of interest, preventing dominant online platforms from buying companies they perceive as competitive threats, and making it easier for consumers to port data between platforms. “The legislation represents the most comprehensive effort to reform century-old antitrust laws,” CNBC had reported then.
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