Apple Inc. (AAPL) faces the prospect of eliminating various anti-competitive practices by the North Dakota App Store if a recent bill passed in that state’s Senate becomes law. Any “digital application distribution platform” with annual sales in excess of $ 10 million would be subject to this legislation. The other leading platform is Alphabet Inc.’s Google Play Store (Aco, TogetL).If youIf you
- The North Dakota Senate is considering billing for large app stores with annual sales exceeding $ 10 million.
- The Apple App Store and the Google Play Store are the main targets.
- The bill would forbid major app stores to require exclusivity as a requirement for selling through them.
- When the bill is passed, other states, and possibly the US Congress, may be asked to pass similar bills.
The bill in brief
Bill sponsor Senator Kyle Davison (Republican, Fargo) said at a news conference that the standard 30% commission on sales that app developers from the Apple App Store and Google Play Store will be billed to “increase prices and.” “Leads to limiting consumer choice. “The bill is a model of brevity and clarity that states that any” digital applications distribution platform “with annual sales in excess of $ 10 million must not do any of these three things:If youIf you
- “Encourage a developer to use a digital application distribution platform or a digital transaction platform as the exclusive mode of distribution for a digital product.”
- “Encourage a developer to use an in-application payment system as a user’s only payment method to download a software application, or to purchase a digital or physical product through a software application.”
- “Retaliation against a developer who chose alternative application storage or an in-application payment system.”
Privately owned Epic Games, Inc. is already in litigation against Apple and Google over “anti-competitive restrictions and monopoly practices.” The popular game Fortnite was ejected from both the Apple App Store and Google Play Store after Epic Games rolled out its own payment processing tool to avoid the 30% commission Apple and Google charge for in-app purchases.If youIf you If youIf you
In a hearing for the North Dakota Senate Committee on Industry, Economy and Labor, Erik Neuenschwander, Apple’s chief data protection engineer, claimed the bill “threatens to destroy iPhone as you know it” and “would undermine privacy.” Security and performance built into iPhone by design. “He added,” Put simply, we work hard to keep bad apps out of the App Store. [the bill] might ask that we let them in. “If youIf you
The testimony of a small developer
David Heinemeier Hansson, Chief Technology Officer (CTO) and co-founder of Basecamp, which he calls “a little Chicago internet company that sells.” Project management Software and e-mail services, “testified before the same committee, reading from prepared observations. The most important passages include:If youIf you
“”[F]ees over 30% of sales, applied selectively and in many cases capriciously, represent an enormous economic burden for many small software companies … [That,] Coupled with the constant uncertainty as to whether the next software update will be rejected or held as a ransom, this can put entire companies at risk. ”
“”[S]Mall software developers from all over the country … are fed up with being bullied and shaken by a handful of big tech monopoly from Seattle and the US Silicon Valley. ”
“”[W]When it hits the App Store DuopolyNo single change will have greater impact than giving small software makers like us a choice when it comes to in-app payment systems and protecting them from retaliation if we turn down the onerous deal the monopolists are offering. ”
“It’s just obscene for a small software company generating $ 1,000,000 in revenue to send a check for $ 300,000 to Cupertino or Mountain View instead of investing in growing its business while Facebook[Inc([Inc([Inc([Inc(FB)]makes billions out of the same app stores without cutting their revenues. ”
Importance for investors
The North Dakota bill would only affect the operation of app stores in that state. However, to comply with this, Apple and Google would be forced to make significant changes to their App Store platforms that could affect the national distribution of software.If youIf you
Additionally, the passage of this law could encourage other states, and possibly the United States Congress, to pass similar laws that limit and potentially impose even more on the profits of these platforms Compliance costsespecially when the legal requirements vary significantly from state to state.
In his invitation to the annual meeting 2021 and Power of Attorney FormApple has indirectly recognized this potential for the first time Antitrust law Measures become a growing risk for the company.If youBack in November 2020, Apple announced that it would halve the App Store commissions to 15% for smaller app developers with annual app store sales of less than $ 1 million. Clearly, this move should lessen some of the antitrust scrutiny and political heat against it.If youIf you