Apple wins a victory when North Dakota passes a bill that would regulate app stores

The North Dakota Senate voted 36-11 on Tuesday not to pass a bill requiring app stores to allow software developers to use their own payment processing software and to charge fees charged by Apple and Google be, to avoid.

The vote is a victory for Apple, which says the App Store is a core part of its product and that its strict control over its rules protects iPhone users from malware and scams.

The North Dakota bill is the first major U.S. legislation at the U.S. level to address Apple and Google app stores, requiring up to 30% of app store sales, including the purchase of digital items in the app. If the state legislature accepted it, it would still be debated and voted on in the North Dakota House.

The North Dakota bill has targeted Apple’s fees by requiring companies that earn more than $ 10 million a year in the state through app stores – essentially just Apple and Google – to offer alternative payment processors for purchases through the app store , so developers avoid the cut of Apple or Google. This only applies to companies in North Dakota.

Apple is against the bill. Last week, Erik Neuenschwander, an Apple official who focuses on privacy engineering, testified that the bill ‘threatens to destroy the iPhone as you know it’ and that Apple customers can buy other brands of smartphones if they want to. Phones using Google’s Android software may already be using alternative app stores.

“Simply put, we work hard to keep bad apps out of the App Store; Senate Bill 2333 may require us to let them in,” Neuenschwander said. “For a store owner, it’s like the government forcing you to store your shelves with products you know that have no quality, authenticity or even safety.”

An Apple representative declined to comment Tuesday.

One reason this North Dakota Bill is being closely watched is that it may inspire other states, such as Arizona, which are currently debating legislation on Apple’s commercial power.

North Dakota is a strange place for this legislation. It’s a small state, not a major app development center, and neither Google nor Apple have their headquarters there.

“North Dakota has a chance to be a leader, we have a chance to send it through the hall for further discussion,” said State Senator Kyle Davison, who introduced the bill and supported it. “This is an economic development bill, because if this bill gets through, there will not be enough hangar space to fly the private jets from California.”

On Tuesday, the discussion of the legislation focused on Apple, which senators tend to avoid naming because of decor rules, but rather a ‘technology company’ or, as Randy Burckhard, North Dakota state senator, said, ‘the same fruit Adam and Eve were not asked to eat. ‘

“North Dakota is not the place to settle a dispute between companies over what the commission figures or payment systems should be,” said Jerry Klein, a state legislator who opposed the bill.

Last year, Epic Games, the gaming company that manufactures the popular shooter Fortnite, filed antitrust applications against Apple and Google, which are currently working through the courts, focusing on many of the same issues, including alternative app stores and offering software vendors the option to use their own payment processor .

Epic Games is part of an effort called Coalition for App Fairness (CAF), which includes software companies such as Spotify, Match Group and 50 other companies that have scraped its App Store under Apple’s control.

A coalition spokesman said Tuesday the in-app equity coalition worked for the North Dakota bill. A North Dakota lobbyist working on the bill represents Epic Games, Match Group and the Coalition for App Fairness, and helped Epic Games testify, said Tera Randall, Epic’s VP of Communications and Policy. said an email.

“The Coalition for App Fairness wants to see urgent changes to the App Store and supports policy solutions at the state, federal and international levels,” Meghan DiMuzio, CAF’s executive director, said in a statement.

The New York Times reported on Tuesday for the first time on Epic Games’ lobbying work around the bill.

Match Group declined to comment. Epic Games pointed to Randall’s testimony last week.

“The competitive competition practices on mobile platforms today are suppressing innovation and subjecting mobile developers under crippling constraints. This is harming consumers by reducing choice and price increases,” Randall testified last week.

In October, the House Judiciary Subcommittee said in a report that Apple’s ‘monopolistic power’ over iPhone apps was making excessive profits. In 2019, the Supreme Court ruled 5-4 against Apple in a case that opened up the possibility of consumer lawsuits against Apple’s app store due to the alleged rise in app prices.

Last year, Apple introduced a new app that lowers its in-store sales fee from 30% to 15% for companies that earn less than $ 1 million a year in Apple’s store.

While both Apple and Google operate critical app stores for the two major smartphone operating systems, iOS and Android, Apple has conducted significantly more research into software distribution than its competitor in Silicon Valley.

One reason for this is that Apple does not allow competing app stores on iPhones, while enabling Android stores like Samsung. The North Dakota bill opened a door to competing app stores when it was introduced, but an amendment Tuesday limited the legislation to processing payments.