Bipartisan Senate Antitrust Bill Takes Aim at Apple and Google App Store Dominance

Video source: YouTube, CNBC Television

A bipartisan Senate bill introduced Wednesday seeks to bring more competition to the app store market currently dominated by Apple Inc (Nasdaq: AAPL ) and Alphabet Inc’s (Nasdaq: GOOGL ) Google. 

The Open App Markets Act, which was sponsored by Senators Richard Blumenthal (D-Conn), Amy Klobuchar (D-Minn) and Marsha Blackburn (R-Tenn), aims to change up the business model of both companies' app stores as well as the structure of their mobile operating systems.

Among the new rules proposed by the measure is one that would force Apple and Google to permit users to download apps from outside of their respective App and Play Stores – something known as "sideloading."

Apple currently forbids the practice, asserting that it poses a security risk to users. Google, meanwhile, allow users to download apps from elsewhere but is being accused in a separate lawsuit brought by 36 states + Washington, DC, of making the process “unnecessarily cumbersome and impractical.” 

The proposed law would also ban the tech giants from forcing developers to use their payment systems for in-app purchases, the practice at the center of a long-running lawsuit brought against Apple by Epic Games. 

“For years, Apple and Google have squashed competitors and kept consumers in the dark—pocketing hefty windfalls while acting as supposedly benevolent gatekeepers of this multi-billion dollar market,” Blumenthal said in a statement. “This bipartisan bill will help break these tech giants’ ironclad grip, open the app economy to new competitors, and give mobile users more control over their own devices.”

Blumenthal told Reuters he expected companion legislation in the House of Representatives "very soon."

App developers have long complained that Apple and Google exert far too much control over the app market, while companies including Spotify and Epic Games have taken issue with the commissions on purchases made by customers in the app stores.

Earlier this year, the Senate Judiciary Subcommittee on Competition Policy, Antitrust and Consumer Rights heard from Apple and Google, as well as Spotify Technology, Tile and Match Group, three companies that argued their businesses have been negatively impacted by anti-competitive app store policies.  

“Competition is critical to protecting small businesses and consumers, spurring innovation and promoting economic equity. But as 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. This raises serious competition concerns,” Klobuchar said in a statement on Wednesday. 

“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,” she added. 

Proponents of the bill, which include a variety of consumer rights, digital access and anti-monopoly organizations, say it will make the market fairer and help spark innovation. 

Meanwhile, Adam Kovacevich, a former Google policy executive who leads the new tech-backed industry group Chamber of Progress, called the new bill “a finger in the eye” for Android and iPhone owners. 

“I don’t see any consumers marching in Washington demanding that Congress make their smartphones dumber,” Kovacevich said. “And Congress has better things to do than intervene in a multi-million-dollar dispute between businesses.”

An Apple spokesperson said in a statement to The Verge, “Since our founding, we’ve always put our users at the center of everything we do, and the App Store is the cornerstone of our work to connect developers and customers in a way that is safe and trustworthy.”

The spokesperson continued, “At Apple, our focus is on maintaining an App Store where people can have confidence that every app must meet our rigorous guidelines and their privacy and security is protected.” 

A Google spokesperson cited previous company statements that Android devices often come preloaded with two or more app stores and that app sellers can allow downloads without using Google's Play Store.

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Source: Equities News