Bill aims to curb Apple and Google app stores


Two bills pending in the Illinois General Assembly would limit the ability of tech giants like Apple and Google to dictate how transactions are conducted and how much discount they receive from those transactions, when consumers make certain types of purchases using smartphone apps.

If passed, the bill would make Illinois the first state to regulate this segment of the e-commerce industry, but a broader bill is also pending in Congress, where it appears to benefit from bipartisan support.

Currently, app developers pay Apple’s App Store and Google’s Play Store an annual fee to distribute their apps on these platforms. In addition, Apple and Google take a percentage commission on so-called “digital-only” transactions like dating services, journalism or digital music – those that don’t involve the purchase of goods or services. physical services.

These commissions amount to 15% of the transaction on the first million dollars of sales and 30% of all transactions beyond.

“I was there in the tech industry the last time the U.S. government sued a major tech monopoly with the (2001 Department of Justice) case against Microsoft,” said David Heinemeier Hansson, CEO and co-founder from Chicago-based software company Basecamp. Senate Committee Tuesday.

“What Apple and Google are doing today makes what Microsoft was doing then look like child’s play,” he said. “At the height of its power and arrogance, Microsoft never even thought it could impose a tax on all software running on the Windows operating system. But that’s where we are today, Apple and Google demanding a 30% cut in revenue for an ever-increasing share of transactions on their platforms.

Two bills are currently pending in the General Assembly that would give Illinois-based app developers more control over their app sales, Senate Bill 3417 and House Bill 4599, creating the “Freedom to Subscribe Directly Act”.

This would prohibit major app delivery platforms such as the App Store and Play Store from requiring Illinois-based app developers to use a particular in-app payment system as their exclusive mode of accepting payments. payments.

It would also prohibit these stores from requiring Illinois customers to use these integrated payment systems to download or purchase an app, and it would prohibit them from retaliating against Illinois-based app developers or users. ‘Illinois for using a different integrated payment system.

The bill would not apply to certain “special” application distribution platforms, including those designed for game consoles, music players and public safety agencies.

Mark Buse, head of government relations for Match Group, the makers of Tinder and other online dating apps, said his company paid Apple and Google $550 million in fees last year, from the money that he says ultimately comes out of consumers’ pockets.

“That’s money we could reinvest in technology, hire employees, put employees on the ground in Illinois, and offer consumers lower prices,” he said.

Industry officials, however, have argued that consumers actually have a choice of payment methods and app developers have options for distributing their software.

Carl Szabo, vice president and general counsel of NetChoice, a trade association that promotes free speech and free enterprise on the internet, noted at a House committee hearing Wednesday that companies such as Netflix and Spotify require their users to go directly to their company’s websites to sign up for services and therefore pay no commission to Apple and Google for distributing their apps.

“At the same time, Match Group for example, you can actually walk down the street to CVS right now, go buy a gift card for Match and Tinder and all the services they provide,” he said. . “So the idea that there is only one form of payment does not correspond to reality.”

Montana Williams, director of state and local public policy for the Chamber of Progress, a trade group that represents tech companies, also said the bill would violate the Commerce Clause of the U.S. Constitution, which gives Congress exclusive power to regulate interstate commerce.

“Because Apple and Google’s App Stores are not limited to state law, the State of Illinois does not have the authority to regulate these interstate transactions,” she told the committee. bedroom.

Neither committee took action on the bills, and supporters said Wednesday that technical amendments were needed before they were ready to be sent to the full House and Senate.

Capitol News Illinois is a nonprofit, nonpartisan news service covering state government and distributed to more than 400 newspapers statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.


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