Sens. Marsha Blackburn, R-Tenn., and Richard Blumenthal, D-Conn., conduct a news conference in Capitol.
Tom Williams | CQ-Roll Call, Inc. | Getty Images
A new bipartisan bill announced Wednesday seeks to bring more competition to the app store market currently dominated by Apple and Google.
The Open App Markets Act, led by Sens. Marsha Blackburn, R-Tenn., and Richard Blumenthal, D-Conn., and Amy Klobuchar, D-Minn., would shake up the business model of both company’s app stores and the structure of their mobile operating systems.
The bill targets, in part, the in-app payment systems for companies that own app stores with more than 50 million users in the U.S. Under the bill, companies like Apple and Google would not be allowed to condition distribution of an app on their app stores on whether the developers use their in-app payment system.
They also would be prohibited from keeping developers from communicating with app users about “legitimate business offers,” or from punishing developers for using different pricing terms through another system. Developers have complained of being unable to advertise lower prices that customers could receive off of the apps, which would allow them to circumvent app store fees.
The bill would aim to keep app stores from disadvantaging certain developers and allow for third party app stores. While third party app stores are available to Google’s Android users, Apple limits access to app downloads through its own app store.
The bill would also allow for apps to be sideloaded, meaning they don’t need to be downloaded from an official app store. Apple in particular has expressed concern that sideloading could open consumers’ phones to security vulnerabilities.
The legislation does leave room for platforms to make the case that its in-app payment system is necessary for security purposes. The bill says that any platform covered by the legislation would not be in violation if an action is necessary for user privacy or security, a fraud prevention effort or a way to comply with federal or state law.
App developers have complained to Congress and in court that Apple and Google maintain a tight grip over their businesses through control of their app stores, which are the gatekeepers of access to mobile app consumers. Companies like Epic Games and Spotify have taken issue with the companies’ commissions on purchases customers make in their apps.
For example, Apple would take 15% to 30% cut of the payment a customer makes for upgrading to Spotify Premium through the iOS app. Apple has also prevented companies from advertising in through its apps that customers can get lower prices by buying through a different channel so that the developer can avoid the fee.
Apple and Google say the commissions they charge from app purposes are standard for the market and that it costs money to build and run the app stores they operate. Many developers say they don’t oppose paying some fees to cover those costs, but that the current ones are unreasonably high.
Developers have also launched allegations that app store operators use knowledge of their markets to compete with them. For example, Spotify has been among the most vocal opponents of Apple, which has a competing music streaming service of its own. Spotify has charged that Apple “routinely rejects bug fixes and app enhancements that would improve user experience and the app’s functionality” while declining to put such “obstacles” in front of its own service.
The Open App Markets Act would prohibit large app store operators from using non-public business information from a third-party app to compete with it. It also would prohibit those companies from “unreasonably preferencing or ranking” its own apps or those of its business partners ahead of others.
Under the bill, the Federal Trade Commission and state attorneys general could take action against the platforms. Developers would also be entitled to sue for injunctive relief.
Representatives from Apple and Google were not immediately available to comment.
This story is developing. Check back for updates.
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