How the Open App Markets Act wants to remake app stores

Last week, the Senate Judiciary Committee passed the Open App Markets Act, one of lawmakers’ latest attempts to limit the power of big tech companies — a big step toward opening up iOS and Android app stores. . But the proposal has raised questions about moderation and safety alongside praise from anti-monopoly watchdogs, reflecting a global debate over the pros and cons of walled gardens.

The bill aims to increase competition in mobile computing, an area where many people agree that a few companies have too much power. But as a series of proposed amendments has demonstrated, not everyone agrees on where that power should end.

What is the Open Application Markets Act?

You can read the Open App Markets Act or S. 2710 for yourself – unlike some omnibus tech reform bills, it’s not that long. But fundamentally, he’s saying companies that operate app stores with more than 50 million US users shouldn’t engage in certain potentially anticompetitive behaviors. Including:

  • Require developers to use the company’s own in-app payment processor as a condition of store use
  • Penalize a developer for offering better prices on another app store
  • Prevent developers from directly contacting customers with commercial offers
  • Using private analytics data from third-party apps to create its own competitors
  • “Unreasonably” favoring own apps in search results

If a company that has an app store also controls the underlying operating system, it should also make it easy for users to do the following:

  • Install third-party apps without using the App Store
  • Choose third-party apps and app stores as system defaults
  • Uninstall or hide pre-installed apps

Companies that violate the rules could face antitrust action from the Federal Trade Commission, Attorney General and state attorneys general, as well as civil lawsuits from “any developer” who has been wronged. by prohibited conduct.

Notably, the bill does not explicitly cover app stores on every device. It defines the term as a “publicly available website, software application, or other electronic service” on “a computer, mobile device, or other general-purpose computing device.” This apparently exempts consoles like Microsoft Xbox and Sony PlayStation, which offer locked app stores but are specialized gaming devices.

Mostly, yes.

The senses. Richard Blumenthal (D-CT), Marsha Blackburn (R-TN), and Amy Klobuchar (D-MN) introduced the Open App Markets Act in August 2021 as part of a larger antitrust reform effort that includes the American Innovation and Choice Act Online. But it clearly addresses complaints from iOS and Android app developers, who say Apple and Google charge unfair fees on in-app purchases (e.g. the dreaded “Apple Tax”) and lock down their iOS and Android platforms. to disable them completely or strongly. discourage the installation of apps outside of their stores. Although some states have introduced similar legislation, this is the first serious federal effort.

Government agencies and developers have already sued and argued that these practices violate existing antitrust law – especially fortnite publisher Epic Games, which went to court with Apple last year. But Epic’s lawsuit was shot down and other cases have yet to be decided, while this bill would establish the practices as clearly illegal.

In his opening remarks, Blumenthal compared in-app purchase fees to Microsoft’s attempts to charge a “vigorous” on every Windows-based Internet transaction in the 1990s, saying that where Microsoft failed, platform makers mobiles had succeeded. “Google and Apple own the rails of the app economy, just like the railroads at the turn of the last century,” Blumenthal said. “If you’re a consumer, this measure for you means cheaper prices, more innovation, better products and more consumer protections by opening up the walled garden.”

Who supports the bill?

As you might expect, Google and Apple aren’t fans. Apple said it was “deeply concerned” about the legislation, focusing on the potential risks of letting consumers sideload apps and use alternative app stores, which could allow developers to circumvent privacy measures and Apple security. Vice President of Public Policy Mark Isakowitz said the bill could “destroy many of the consumer benefits that current payment systems provide and distort competition by exempting gaming platforms, which amounts to the Congress trying to artificially pick winners and losers in a highly competitive marketplace.”

Conversely, the companies’ biggest critics – and their competitors – are largely in favor of it. The antitrust-focused American Economic Liberties Project urged the Senate to pass the bill, calling it “part of a growing movement by policymakers to rein in the monopoly power of Big Tech.” . The Biden administration has also signaled its support, praising “bipartisan progress” on antitrust reform.

In the tech industry, Microsoft Chairman Brad Smith praised lawmakers on Twitter, saying it would “foster competition and ensure fairness and innovation in the app economy.” (Google Chief Legal Officer Kent Walker called it “disappointing that Microsoft is pushing so hard for a law targeting its competitors while creating its own exception for Xbox.”)

But the battle lines aren’t as clear as “Apple and Google vs. the world.” Even those who support the general purpose of the legislation may disagree on whether it succeeds in carefully targeting monopolistic business practices or whether it would create collateral damage in other areas.

Sounds like an excuse a monopolist could use. Are there really substantive criticisms?

Well, there’s an ongoing discussion about sideloading security — something that comes up repeatedly in legal and policy challenges — and tech industry groups like NetChoice say the bill doesn’t address adequately the security risks linked to the opening of the platforms.

Bill’s sponsors have defended his bona fides on security matters; during the markup, Klobuchar called claims that it harms user privacy and security “simply untrue.” The language includes an exception for actions that are “necessary to ensure the privacy, security, or digital security of the user” or “taken to prevent spam or fraud,” and app store owners can defend against anti-competitive claims by arguing that they apply consistent rules for both their own applications and those of competitors. (At least one prominent security expert, Bruce Schneier, has come out in favor of the legislation.) The sponsors also passed a Director’s Amendment that changed the bill’s security language, though the changes didn’t did not silence the critics.

Then there is an arguably more complicated debate about something that is not explicitly addressed in the bill: moderation. Shortly before the vote, a coalition of researchers and advocacy groups warned that the Open App Markets Act could penalize companies for exercising basic editorial judgment on their app stores. They warned that in their current form, the rules against app privileging could be “misused to pressure mainstream platforms into disseminating extremist content, hate speech and misinformation”.

If the rule was active when Google kicked a social platform like Talking out of its Play Store, for example, Talking could claim that Google favored other social apps, including its own YouTube app. The coalition argues that even if this argument ultimately didn’t make it to court, the Open App Markets Act could drag on legal action and discourage stores from removing even apps that violate their policies. As a solution, it is suggested that the preference rules be reworded to clarify that they only apply “based on a criteria of participation” – in other words, developers should argue for discrimination based on economic rather than editorial grounds.

For conservative lawmakers like Sen. Ted Cruz (R-TX), editorial control is an explicit selling point of the bill; in fact, they think it doesn’t go far enough. Cruz offered an amendment during markup for app stores to exercise “neutrality” based on the political content of apps, tweaking an antitrust-focused bill to also tackle online culture wars. Like all of the amendments except for the original Director’s Amendment, Cruz’s proposal was defeated, but the problem is likely to continue to arise.

What are the chances of this bill passing — and making a difference?

There’s an important caveat to the “Apple tax” since it’s a key part of the Open App Markets Act: getting rid of in-app purchase requirements wouldn’t necessarily kill it. the Epic vs. Apple The ruling suggested that Apple could theoretically collect commission from developers through methods other than payment processing fees. After Dutch regulators asked Apple to start allowing some app developers to use alternative payment systems, Apple offered just that solution. Developers who decline Apple payments would simply pay a separate 27% fee on in-app purchases, a whopping 3% savings for a system that users might find more complicated.

At the same time, by forcing Apple and Google to soften their stance on third-party app loading and stores, the bill could significantly change the way mobile computing works. And after his nearly unanimous committee vote, with only Sen. John Cornyn (R-TX) voting against, there’s a lot of momentum behind it. But the bill still needs an equivalent in the House of Representatives – HR 5017 – to get a similar vote, and then for both to get a final vote in their respective chambers.

Regardless of the outcome, there is growing international pressure on current app store practices. The Dutch regulations above target mobile “walled garden” arrangements, and South Korea has also adopted similar rules. But the United States is the territory of these companies – and their rules could be about to change.

About Sandra A. Powell

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