Last month, a lobbyist approached Kyle Davison, a North Dakota senator, with an unusual proposal: a law to stop Apple and Google from forcing companies in the state to hand over a portion of their app sales.
Mr. Davison, a Republican, was focused on accounts related to a $ 200,000 literacy program and birth certificates for the homeless. But he was interested in the lobbyist’s arguments that the technology giants were harming small businesses, and he thought such a law could lure technology companies to North Dakota. That is why he proposes it.
“She told me it could be big. But for me it means that the local newspaper will come with a camera, ‘said Mr. Davison, 60, said. “I would not be right if I said I was expecting the reaction.”
At the Capitol in Bismarck, a 21-story Art Deco tower that is the tallest building in the state, a hearing on the bill last week drew Washington attorneys, North Dakota newspapers and executives in Silicon Valley. Along with Apple and Google were Americans for Prosperity, the conservative group funded by the Koch family. On the other side was the Fargo Chamber of Commerce. One person called in from Alaska.
Supporters of the bill said it would help smaller businesses and that it would only hurt Apple and Google’s revenue. Apple’s chief private engineer, Erik Neuenschwander, testified that the bill ‘threatens to destroy the iPhone as you know it’.
North Dakota is part of a new front in the battle over Big Tech and its power. Frustrated with the lack of action by courts, regulators and Congress, technology rivals and critics are turning their attention to state legislators, while pushing bills that would tax the biggest technology companies, curb their power and limit their control over the Internet.
New York is considering a bill that would make it easier for the state to pursue antitrust lawsuits against the big tech companies. Lawmakers in Florida this month proposed measures, backed by the governor, that would limit how social media companies could police content on their sites. And on Friday, Maryland enacted a law that would tax online ads sold by companies like Facebook, Google and Amazon. Connecticut and Indiana look at similar accounts.
The state battles pose a thorny issue for tech companies, whose legions of lawyers and lobbyists have been trained to eradicate threats in Washington and the courts. The 50 state legislatures are diverse and unpredictable, with both Republicans and Democrats joining Big Tech.
The North Dakota bill focuses on the practices of Apple and Google to cut up to 30 percent of many app sales on smartphones, a policy that brought businesses a total of $ 33 billion last year, according to Sensor estimates Tower, an app data firm. .
Some smaller businesses have argued that Apple and Google are forcing app manufacturers to pay only an artificially high fee because of their sheer dominance. The two companies’ software supports almost all the smartphones in the world.
The bill bans Apple and Google from requiring apps to use their payment systems, enabling them to collect their commissions.
It will also require Apple and Google to allow users of their smartphones to download apps from outside their flagship app stores, though Mr. Davison said he was trying to remove the provision to alleviate some of his colleagues’ concerns. Google already allows such downloads, but Apple does not.
North Dakota’s 47 senators will vote on the measure this week after the debate began Monday. The timeline is being accelerated because the legislature meets only 80 days every two years. If a majority votes, the bill will pass to the House.
If the bill fails, Apple and Google’s fight is far from over. Georgia and Arizona lawmakers are considering nearly identical legislation on the app store, and Andy Vargas, a Massachusetts state attorney, said he plans to introduce a similar bill this week. Lobbyists said they are also campaigning for computer stores in Wisconsin and Minnesota.
An Apple spokesman said most iPhone apps are free and pay no commission. She added that most North Dakota companies that shared revenue with Apple earned less than $ 1 million a year from their apps, meaning they paid 15% of some sales, rather than 30%, to Apple. Apple lowered its rate for smaller businesses last year amid research into the App Store policy.
Google did not respond to a request for comment.
Mr. Davison said he received the draft legislation through Lacee Bjork Anderson, a lobbyist at Odney Public Affairs in Bismarck. Me. Anderson said in an interview that she was hired by Epic Games, the maker of the popular game Fortnite, and the plaintiff in lawsuits against Apple and Google over their application policies. She said she was also paid by the Coalition for App Fairness, a group of companies including Epic, Spotify and Match Group, which has been protesting app commissions and leading the lead for computer bills in the app store.
“Look, we are a very conservative state,” she said. Anderson, a Republican, said. “But we’re also a state where Teddy Roosevelt comes from, and there’s no bigger trustbuster.” (Roosevelt, the former president, was born in New York but later owned a farm in North Dakota.)
Still, she acknowledged that the bill may not have enough votes to pass, which she attributed to confusion among some senators and aggressive lobbying by Apple.
“They put Zoom calls with every senator,” she said. “It’s not necessarily going well here – managers or lobbyists in California are trying to tell people what to do.”
State Senator Jerry Klein, the Republican who leads the committee that drafted the bill, agrees that Apple’s presence in the State House is being felt. He said he opposed the legislation, mainly because Apple and its lobbyists had warned that the bill could put North Dakotans at risk of cyberattacks and that North Dakota could be subject to expensive lawsuits. He is also worried that interference in an agreement between two private companies will be bad for business.
Mr. Klein, 69, a retired owner of a small Fessenden grocery store, said some of his colleagues were also wary of a bill targeting ‘digital distribution platforms for applications’ and ‘payment systems for applications’. pack when they are struggling with the effects.
“All people here know is that they plugged in their phone, it has power, they can take pictures and show pictures of their grandchildren,” he said. “It goes beyond some of us.”
However, some application manufacturers pay a lot of attention to the legislation. David Heinemeier Hansson, a Danish technology entrepreneur who fought with his email app, Hey, to avoid Apple’s fees, can say that the bill could be a significant blow to Apple’s policies, although only in the North. -Dakota companies apply.
He said that if he passed the bill, he would be willing to set up offices in North Dakota. And he predicted that many other companies would join him if they moved there to pay 30 percent of sales.
“You don’t have to be that big of a software company before 30 percent of your revenue is your biggest line item,” he said. He added that he had never been to North Dakota, where the temperature had dropped to minus 18 degrees Fahrenheit the other day, “but I hear it’s delicious.”
Mr. Heinemeier Hansson said he did not bet North Dakota would approve the law, but he said the fact that the bill received attention and a vote would encourage other states to consider similar measures.
“That’s why Apple remarked with the big scary picture that it would end the iPhone as we know it,” he said. “Of course it will not end the iPhone as we know it, because it will succeed in North Dakota. They are afraid that whichever locks open the locks first, the locks will then be open. ”