App makers explode Apple and Google in Senate trial over app store policies

In a lengthy Senate hearing, the app makers said that Apple and Google’s rules regarding in-app payments and app updates enable the technical giants to stifle competing services, and that they retaliate when app- developers refuse to comply.

The occasional tense showdown has highlighted how Apple’s monitoring is sharpening after more than a year of similar focus on its peers like Amazon, Facebook and Google. And lawmakers were clear that the trial would be a springboard for legislation to curb major technology platforms.
A large portion of the trial did not affect Apple’s treatment of app manufacturers, largely because of Apple’s closed ecosystem that bans the installation of iOS apps from anywhere other than the Apple app store.
This week, Apple introduced a new product known as the AirTag, a small device that can detect the missing items. Tile, which makes a competitive product, has accused Apple of giving its AirTag an unfair advantage to the home court by not allowing Tile devices to use the same advanced, ultra-broadband frequencies to communicate with iPhones as AirTag uses.

Kyle Andeer, head of Apple compliance, testified that AirTag is a ‘very different product’ and that the company is excited to compete in the market.

Criticism of Apple has only increased since then. Other witnesses have blasted Apple’s use of digital goods and services providers to charge a 30% commission on in-app transactions. Apple has argued that its fees are aimed at making sure the iOS ecosystem is safe and reliable for users.

Jared Sine, chief legal officer of Match Group – which owns Tinder – says that app store fees now make up the company’s largest single expense, amounting to $ 500 million a year. (If a user buys a premium subscription through, for example, Tinder’s iOS app, 30% goes to Apple.)

“That’s $ 500 million that could go back into the pockets of everyday consumers or be used to hire employees or invest in new innovations,” Sine said.

Companies trying to find alternatives to Apple’s in-app payment system – such as by encouraging users to pay directly on an app’s website – are quickly finding themselves on Apple’s bad side, said Horizio Gutierrez, Spotify’s chief justice.

“We could not even email our users to tell them about a way to upgrade” that was not paid for by Apple, Gutierrez said, calling Apple’s contractual restrictions a kind of “gag order” .

App developers crossing the tech giants are afraid of retaliation, the app makers said. Sine testified that on the eve of the trial, Google contacted Match Group to ask for an explanation of the upcoming evidence.

Apple Power of Attorney Statement Contains Antitrust Risk Section

Sen. Richard Blumenthal described the behavior of Apple and Google as “unquestionably defensive” and after hearing Sine’s testimony, subcommittee chair Amy Klobuchar said the call from Google was a case of intimidation being investigated by the Senate. must be.

“That’s the plan,” Klobuchar replied.

Wilson White, a senior director of public policy at Google, testified that he disagreed with Sine’s characterization of the call.

“I do not consider it a threat, and we will never threaten our partners,” he said.

Apple later responded to Spotify’s allegations of unfair retaliation – such as allegations that Spotify refused to place a promotion in the app store due to its criticism of Apple – by pointing to Spotify’s tremendous business success.

“We have supported these businesses,” said Andeer. “There is no evidence of retaliation.”

Andeer also defends Apple’s 30% commission structure, saying the company has chosen to apply the fees to digital goods and services from the start and that most app developers pay nothing at all.

“We now have a market in which we have 1.7 million programs,” he said. “Eighty-four percent of them pay nothing.”

Apple will face Epic Games, the maker of the hit video game “Fortnite”, next month in a case that is being closely watched over fees in the app store.

But Senator Mike Lee, the panel’s ranger, challenged Apple to explain why some services, such as Uber, were excluded from the commission requirement, while online dating apps like Tinder were still subject to it.

Apple has struggled to persuade Lee of the distinction, arguing that Uber does not provide a digital good or service because it involves consumers calling a driver for physical transportation. In contrast, with online appointments or e-book purchases, Andeer said, “all the experiences are within the four corners of the device.”

This still did not make sense to Lee or Sine, who argued that app store operators such as Apple and Google ‘essentially took the internet and moved it to the app stores’.

“They set up their gates, they set up their toll booths; you have to pay the tolls if you are a digital good and service,” Sine said. “They give everyone access to the highway, and what we say is, why is the highway not the same for everyone?”