Changes to Apple’s App Store fail to influence lawmakers bent on overhaul

(Bloomberg) – U.S. lawmakers are pushing forward with legislation to change the way Apple Inc. operates its App Store, unconvinced by recent steps the company has taken to address antitrust complaints from developers and regulators in the whole world.

A bill proposed by a bipartisan trio of senators would force significant changes in the way consumers download and use apps on their iPhones and other Apple devices. Minnesota Democrat Amy Klobuchar, head of the Senate antitrust subcommittee and one of the bill’s sponsors, said Congress was no longer willing to trust tech companies to “do the right thing. “.

“Although Apple has taken a few small steps to respond to criticism of its anti-competitive behavior, they haven’t gone far enough,” Klobuchar said Tuesday in a statement to Bloomberg. “There is growing momentum to pass the Open App Markets Act to finally tackle the dual monopolies of Apple and Google, and I will continue to work with my colleagues on both sides of the aisle to achieve it. “

Apple and Alphabet Inc.’s Google Play Store have a duopoly in the mobile application market outside of China. Last year in the United States, 59% of app downloads were from Apple’s App Store and 41% from Google Play, according to data from Sensor Tower, an app data company.

The Senate bill would require devices to host alternative app stores, allow consumers to make purchases using alternative payment systems, and give app developers access to all aspects of iPhone hardware, including components that were previously exclusive to Apple apps and accessories.

Some of these changes are said to have a bigger impact on Apple than Google, allowing Android users to download competing app stores. IPhones don’t, functioning more like a “walled garden” which Apple says puts user safety first.

Several global developments, including a similar law passed by South Korea’s National Assembly last month, have prompted the United States to make its own changes. Biparty support for the App Store proposal means it has the potential to gain traction, even though Congress has a full list when lawmakers return to Washington this month.

Other senators are considering signing on as co-sponsors, according to two people familiar with the drafting of the bill. The next step for the bill, which has also been introduced in the House, is to get a hearing in the Senate Judiciary Committee.

The legislation was applauded by app developers like Spotify Technology SA, Match Group Inc. and Tile, all of whom testified at a Senate hearing in April to examine the practices of app stores, including the 15 at 30% commission that Apple and Google charge for apps. sales based.

Apple announced last week that it would allow certain media apps like Netflix to direct people to other places, like a website, to pay for services. While the prices for consumers don’t need to change, Apple would lose the commission.

This concession, which follows an investigation by the Japanese Fair Trade Commission, also only applies to certain types of applications – and in particular not to games which represent more than 80% of the revenue of the App Store of ‘Apple and a third of the downloads, according to evidence presented by Epic Games Inc. in its lawsuit against Apple for its app practices.

Still, the change is bigger than the largely symbolic settlement Apple reached last month in a class action lawsuit brought by app developers. But U.S. lawmakers say these changes still fall short of what’s needed to tackle suspected anti-competitive behavior in app stores.

Concession to multimedia apps could calm Apple’s harshest critics, but forcing game developers to continue using the company’s in-app purchasing system still raises legitimate antitrust questions about the abuse of market power. by Apple, said John Bergmayer, the organization’s legal director for technology policy. Public Knowledge, which supports the Klobuchar bill.

“There isn’t 100% agreement among critics of the App Store model on exactly how far to go, but there is consensus that we probably need to go a little further than what Apple has announced. “, did he declare. “It would be better if we solved it more systematically rather than waiting for these little piecemeal approaches.”

Developers leading complaints against Apple say more needs to be done. A person familiar with an app-based business strategy said Apple tends to make bigger concessions than they are. By applying the change to certain apps and payments, the response to Japanese regulators is not helping the apps that generate the most revenue, the person said.

Developers and lawmakers see momentum building for the Senate bill, which is also co-sponsored by Connecticut Democrat Richard Blumenthal and Tennessee Republican Marsha Blackburn.

Apple and Google lobbyists have been in contact with members of the Senate antitrust subcommittee since the April hearing on app store practices, saying the measure would harm user safety and choice of consumers. Apple is particularly pushing back provisions that would force alternative app stores onto iPhones, a process called sideloading, according to lobbyists and Senate staff who have heard of it.

Google declined to comment and Apple did not respond to a request for comment.

Supporters of the bill also expect Apple to challenge the enforcement provision that would allow individual developers to sue for damages.

One development that could impact pressure from Congress to change app stores is the upcoming decision in the Epic case. U.S. District Judge Yvonne Gonzalez Rogers’ decision could force changes to Apple’s App Store, and she has indicated that her decision will not please either side.

Epic CEO Tim Sweeney mocked Apple’s deal with Japan to only allow certain types of apps to bypass Apple’s payment system, wondering why gaming apps like Epic’s Fortnite were excluded.

Japan isn’t the only government watching Apple and Google. European competition authorities have filed a complaint against Apple, which accuses the company of abusing its power in music streaming. In the United States, a coalition of state attorneys general sued Google in July over its app store practices, calling what they called an “extravagant commission” earned on app sales.

The Justice Department is also continuing an antitrust investigation into Apple that began under the Trump administration, according to a person familiar with the matter. Authorities will likely decide next year to file a complaint, the person said.

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About Emilie Brandow

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