A new bill introduced in the North Dakota Senate could have far-reaching consequences for the app store’s stores. The bill, Senate Bill 2333, seeks to ban stores such as Apple’s App Store and the Google Play Store from forcing developers to use only the app stores and their respective in-app payment systems. It also prohibits retaliation against developers if they choose an alternative distribution channel or payment system.
“The purpose of the bill is to level the playing field for app developers in North Dakota and protect customers from devastating, monopolistic fees charged by large technology companies,” Sen. Kyle Davison (R-Fargo), who presented the bill before a Senate committee on Tuesday, told reporters in a press conference yesterday, as reported The Bismarck Tribune. Davison said the 30 percent fee charged to app developers who sell software via Apple and Google’s markets results in “increasing prices and limiting consumer choice.”
The bill is fairly simple and contains three key restrictions for any ‘digital application distribution platform’ that exceeds $ 10 million in annual revenue. This means that an app store does not:
- “Requires a developer to use a digital application distribution platform or digital transaction platform as the exclusive way to distribute a digital product.” That would probably mean companies like Apple should allow app purchases outside of a single closed store.
- “Requires a developer to use a payment system in the application as the exclusive way to accept payment from a user to download a software application or purchase a digital or physical product through a software application.” This will be an iOS version of Fortnitefor example, to process in-app payments via Epic instead of Apple’s system.
- “Revenge on a developer because he chose to use an alternative application store or payment system for applications.”
As a state bill, the proposed legislation will only affect the operation of businesses such as the App Store in North Dakota. But the drastic changes the bill calls for are likely to require companies like Apple to make significant platform-level changes that could affect the distribution of software on a national scale.
The use of alternative payment methods in the app is at the heart of an ongoing legal battle between Fornite developer Epic Games and both Apple and Google, after Fortnite was removed from the App Store and Play Store in August last year for launching its own payment processing tool.
Epic purposefully designed it Fortnite update to circumvent the 30 percent cut in all in-app purchases required by Apple and Google, both to the standard 30 percent saving and specifically Apple’s App Store rules banning third-party app stores from the iPhone. (Google does allow Android users to download third-party software and allows developers to create alternative app stores for software distribution, though this is difficult to do.) Epic is now suing both companies for alleged antitrust violations.
The Epic case is just one part of a growing antitrust movement in the US targeting Big Tech. Each of the major U.S. technology companies, with the exception of Microsoft, is currently being investigated by the U.S. Department of Justice and the Federal Trade Commission, as well as Attorney General, with more monopolistic investigations, with different levels of investigations. While Apple is not being formally investigated, CEO Tim Cook testified before the Senate Judiciary Committee during its technical antitrust hearing last summer. Meanwhile, the European Commission is conducting two ongoing antitrust investigations into Apple’s App Store and Apple Pay.
Apple already testified Tuesday in the hearing with North Dakota’s Industry, Business and Labor Committee in North Dakota against the new North Dakota bill. Apple Neikenschwander, chief privacy engineer, told the committee that the bill ‘threatens to destroy the iPhone as you know it’ and that it will ‘undermine the privacy, security, safety and performance built by iPhone’, according to the Bismarck Tribune. “Simply put, we work hard to keep bad apps out of the App Store; (the account) may require us to let them in. ”
David Heinemeier Hansson, co-founder of Basecamp, who attended the trial and testified in favor of the bill, criticized Apple for exaggerating the threat the bill poses to its business.
North Dakota’s SB 2333 is the first real, concrete bill I’ve seen, which actually gives me hope that technological monopolies are not going to rule the world forever. Fargo or Bismarck sounds like a great place to set up shops under a shield against abuse
– DHH (@dhh) February 9, 2021
Hansson has become an outspoken critic of Apple’s App Store policy, following a showdown his company had with Apple last year over Basecamp’s Hey email client. The difference of opinion was the features of the Hey iOS email app, and Jason Fried, CEO of Hansson and Basecamp, complained that the situation was indicative of Apple’s inconsistently applied rules and how long the company went to ensure that developers do not reduce the mandate by 30 percent. Although Apple and Basecamp reached a compromise, Hansson has since called for congressional action, as well as stronger antitrust regulation, to try to force Apple to change its policy and rule in Big Tech.
In a written testimony Hansson prepared before the trial, he filed his case for Senate Bill 2333. ‘After the considerations read the 17 lines of SB 2333 like music. Written in a language I can understand without seeking advice to analyze it for me. It almost seems too good to be true! But I sincerely hope that is not the case, ‘he wrote in his testimony, which he later released online. “That you’ll be listening to small software developers from across the country who are tired of being bullied and shaken off by a handful of big tech monopolists from Seattle and Silicon Valley.”
Hansson says the US needs a “fair digital market without monopoly abuse” and that “no change will have a greater impact than giving small software vendors like us a choice when it comes to in-app payment systems and protection retaliation, if we refuse the heavy transaction that the monopolists offer. ”
Chairman Senator Jerry Klein (R-Fessenden) said during the committee hearing that ‘there is still a bit to think about’ and that no action will be taken against the bill yet. Neither Apple nor Google immediately responded to requests for comment on this story.