A new bill introduced in the North Dakota Senate could have far-reaching consequences for app store operators. The bill, Senate Bill 2333, seeks to ban stores such as Apple’s App Store and Google Play Store from requiring developers to use only these app stores and their respective payment systems in the app. It also prohibits retaliation against developers in the event they choose an alternative distribution channel or payment system.
“The purpose of the bill is to level the playing field for app developers in North Dakota and protect customers from destructive, monopolistic fees imposed by large technology companies,”
The bill is quite simple and contains three important restrictions for any “digital application distribution platform” that exceeds $ 10 million in annual revenue. This means that an app store cannot:
- “Require a developer to use a digital application distribution platform or digital transaction platform as the exclusive way to distribute a digital product.” This will probably mean that companies like Apple will have to allow app purchases outside a single locked store.
- “Require a developer to use a payment system in the application as the exclusive mode to accept payment from a user to download an application or purchase a digital or physical product through an application.” This will allow an iOS version of Fortnitefor example, processing payments in the app via Epic instead of Apple’s system.
- “Retaliate against a developer for choosing to use an alternative application store or payment system in the application.”
As a bill, the proposed legislation will only affect the operation of businesses such as the App Store in North Dakota. However, the extensive changes required by the bill are likely to require companies such as Apple to make significant platform-level changes that could affect software distribution on a national scale.
The use of alternative payment methods in the app is the core of an ongoing legal battle between Fornite develops Epic Games and both Apple and Google, after Fortnite was removed from the App Store and Play Store in August last year to introduce its own payment processing tool.
Epic purposefully designed his Fortnite update to circumvent 30 percent cuts in all in-app purchases required by Apple and Google as a form of protest, both to standard 30 percent cuts and specifically Apple’s App Store rules that prevent third-party app stores from iPhone. (Google allows Android users to sideload third-party software and for developers to create alternative app stores for software distribution, even if that makes it difficult.) Epic is now suing both companies for alleged antitrust breaches.
The Epic case is just one part of a growing antitrust movement in the United States targeting Big Tech. All the major US technology companies, with the exception of Microsoft, are currently under increased antitrust control by the US Department of Justice and the Federal Trade Commission, as well as state attorneys, with varying levels of investigation underway. While Apple is not under formal investigation, CEO Tim Cook testified before the Senate Judiciary Committee during the summer during his technical antitrust hearing. Meanwhile, the European Commission has two ongoing monopoly investigations of Apple’s App Store and Apple Pay.
Apple has already testified against North Dakota’s new bill in a hearing Tuesday with North Dakota’s Senate Industry, Business and Labor Committee. Apple’s Erik Neuenschwander, its most important privacy engineer, told the committee that the bill “threatens to destroy the iPhone as you know it” and that it would “undermine the privacy, security, safety and performance built into the iPhone by design,” according to Bismarck Tribune. “Simply put, we work hard to keep bad apps out of the App Store; (the bill) may require us to let them in. ”
Basecamp co-founder David Heinemeier Hansson, who attended the hearing and testified in favor of the bill, criticized Apple for exaggerating the threat the bill poses to the business.
North Dakota’s SB 2333 is the first real, concrete legislative proposal I’ve seen that actually gives me hope that technical monopolies will not rule the world forever. Fargo or Bismarck sound like great places to set up shop under a shield against abuse
– DHH (@dhh) February 9, 2021
Hansson has become a vocal critic of Apple’s App Store policies, following a settlement his company had with Apple last summer over Basecamp’s Hey email client. Disagreement centered on the features of the Hey iOS email app, and Hansson and CEO of Basecamp, Jason Fried, complained that the situation was symbolic of Apple’s inconsistently applied rules and the lengths the company goes on to ensure developers do not exceed 30 percent cut the mandate. Although Apple and Basecamp reached a compromise, Hansson has since called for congressional action, as well as stronger antitrust regulation, to try to force Apple to change its policy and to rule Big Tech in general.
In a written testimony Hansson prepared before the hearing, he presented his case for the Senate proposal 2333. «After the takeovers, the 17 lines in SB 2333 were read as music. Written in a language I can understand without hiring advice to analyze it for me. It almost seems too good to be true! But I sincerely hope that is not the case, “he wrote in his testimony, which he later published online. “That you want to listen to small software developers from across the country who are tired of being bullied and shaken by a handful of big technology monopolists from Seattle and Silicon Valley.”
Hansson says that the United States needs a “fair digital marketplace without monopoly abuse” and that “no change will have a greater impact than giving small software vendors like us a choice when it comes to in-app payment systems and protection against retaliation, if we deny the burdensome agreement the monopolists offers. ”
Chairman Senator Jerry Klein (R-Fessenden) said during the committee’s hearing that “there is still some mulling to do” and that no action will be taken against the bill for the time being. Neither Apple nor Google has immediately responded to requests for comment on this story.