Senators want to rein in Apple and Google’s app store dominance

The act prohibits Apple and Google from requiring developers to use their in-app payment systems, posing a major hit to the revenue the companies derive from commissions on in-app purchases. It would also prohibit companies from giving their own apps special preference in search results and bar such companies from extracting data from apps to build their own competing products.

The legislation, co-sponsored by Sens. Richard Blumenthal (D-Conn.), Amy Klobuchar (D-Minn.) and Marsha Blackburn (R-Tenn.), responds to long-running concerns from developers who have long complained that app stores effectively function as gatekeepers and unfairly abuse their power.

Blumenthal said the legislation reflects deep concern in both political parties that these tactics amount to “predatory power” that closes off competition.

“What is most offensive to me is how they strangle new app development,” he said in an interview. “Their tactics really have an impact on innovation that is disruptive to the economy.”

Apple said that its App Store allows developers and customers to connect securely and argued that the store has contributed to economic innovation.

“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,” spokeswoman Marni Goldberg said in a statement.

Google has argued that its app store enables choice for developers and customers alike, though it declined to comment on the legislation.

At a hearing of the Senate Judiciary antitrust subcommittee in April, Google executive Wilson White highlighted alternatives to the company’s Google Play store and emphasized that it allows developers to distribute their app through other app stores and direct downloads on their websites.

Apple and Google’s power has been under the microscope in recent months after Epic, the maker of the popular game “Fortnite,” brought antitrust challenges against the companies.

In August last year, “Fortnite” tried to offer customers an alternative payment method to bypass Apple’s mandatory commission, leading Apple to kick the video game maker off the App Store, a move Epic alleges constitutes anticompetitive behavior.

Epic’s suit against Apple went to trial earlier this year, and the companies are waiting for a federal judge to issue a ruling. If Apple prevails, it could further embolden critics in Washington who say existing antitrust laws are not equipped to deal with what they allege is widespread anticompetitive behavior in Silicon Valley.

“It’s a very graphic and dramatic display of all of the abuses that we target in this legislation,” Blumenthal said.

Epic said in a statement that it’s fortunate to be able to take on the tech giants in court and that this bill would help “level the playing field” for smaller companies.

“This will make it easier for developers of all sizes to challenge these harmful practices and seek relief from retaliation, be it during litigation or simply because they dared speak up,” said Corie Wright, Epic Games vice president of public policy.

Blumenthal said Epic is “only one among a large number of victims here.” Testifying alongside representatives from Google and Apple at the April hearing were developers from Spotify, Tile and Match Group, which accused the tech giants of using their power to squash competition. Spotify’s chief legal officer, Horacio Gutierrez, called on lawmakers to develop legislation to address their competition concerns in app stores, and on Wednesday he issued a statement calling on Congress “to swiftly pass” the Open App Markets Act.

NetChoice, a trade association representing tech giants including Google, criticized the legislation.

“This app store bill intentionally weakens security and privacy protections that millions of Americans rely on to stay safe online,” said Carl Szabo, vice president and general counsel of NetChoice. “This bill is not about protecting consumers but instead the government picking winners and losers in a fight between billion-dollar corporations.”

Blumenthal took issue with the companies’ arguments that their rules ensure consumer privacy and safety.

“These crocodile tears about privacy are really just a pretext,” he said. “They have no concern for privacy. They use consumer information relentlessly and purposely simply to make money.”