For years, tech companies like Facebook and Amazon have faced antitrust criticism from Congress, and Apple has received far fewer questions. But that changed Wednesday when Congress finally sank its teeth into Apple as part of a hearing titled “Antitrust Applied: Examining Competition in App Stores.”
The hearing prompted representatives of companies such as Spotify, Tile and Match Group, a dating app company, to explain how Apple’s App Store fees and walled garden strategy are hurting their businesses. All three companies have given harsh testimony, accusing the iPhone manufacturer of competing behavior due to the heavy fees charged by some app developers in the App Store.
The timing could not be worse for Apple, just a day after the company announced an iPhone-linked article cutter called AirTag in direct competition with Tile. Kirsten Daru, Tile’s chief executive, told Congress that after Apple decided to develop its own article detection services and services in 2019, the two companies’ friendly relationship dissolved.
“If Apple turns us on, it can turn anyone on,” Daru told lawmakers. “And Apple has shown that it will not change if someone does not, which makes legislation so critical.”
Apple’s shifting platform relationships were a theme in the trial, and each company testified how quickly Cupertino’s collaborative outreach could become competitive. Match chief justice officer Jared Sine told lawmakers that app store fees account for the company’s largest single expense, accounting for about one-fifth of the company’s total sales. Spotify’s head of world affairs and chief legal officer Horacio Gutierrez said Apple’s business model equated to “a classic bait and switch”, which attracts developers in its app store and suddenly changes the terms to favor the iPhone maker.
“We all appreciate app stores and the roles that Apple and Google have played in creating many of the technologies that have determined our age,” said Sen. Amy Klobuchar, chair of the subcommittee, said Wednesday. “We are not angry about success … It’s about new products starting. It’s about new competitors popping up. This situation does not seem to me to be happening. ”
WHAT DOES THIS MEAN?
Sen. Klobuchar, who chairs the committee, used these hearings to support her law on competition law and antitrust, which she introduced in February. The bill’s provisions do not align perfectly with the App Store problem, but there are some key provisions that will make it easier for companies like Tile to push back against Apple. The bill would make it less difficult, especially for law enforcement, to sue technology companies for ‘exclusive’ behavior, something that sen. Klobuchar would like to highlight in interviews.
“I don’t think people realize that the 15 to 30 percent tax is on big companies that people enjoy getting music from, like Spotify, that Apple or Google rate, and that all this exclusionary behavior is going on,” Klobuchar said. said. Axios on Wednesday.
For the most part, the companies that provide evidence seem to agree. During the trial, all three representatives argued that legislation was needed for companies like Apple to change their behavior. But Spotify and Tile argued that the committee should also investigate federal legislation specifically targeting app stores.
“We respectfully ask that attention be paid to app stores first,” Tile’s Daru said in light of the discussion on Klobuchar’s bigger bill.
In addition to federal law, states like Arizona have put in place their own measures to make developer-friendly changes to Google and Apple’s app stores. Many of these bills, such as Arizona’s, have failed after intense efforts by technology.
“They are fighting so hard because it is at the heart of maintaining their monopoly,” Sine said.
THE HIGHLIGHT
Biden’s nominated candidate to be the next Democrat in the Federal Trade Commission is also ready to raise the heat in the App Store. At Lina Khan’s confirmation hearing on Wednesday, Klobuchar asked Khan about the power companies like Apple and Google regarding their app stores:
Khan: It really is the source of power. There are basically two main options, which give these companies the power to in some cases really determine the term in this market. I think you completely seemed that certain conditions do not have any beneficial justification. So I think in those cases we should be especially skeptical and look really nice.
WHAT IS NEXT?
Earlier this year, Klobuchar said the committee would hold a series of hearings aimed at competition in the technology sector, including Facebook and Google’s dominance in the advertising market. The hearings have yet to be scheduled.