US state advances bill breaking App Store grip on payments

The US state of Arizona on Wednesday advanced a bill that would break the cherished grip that Apple and Google have on the handling of payments in mobile apps.

Apple and Google require developers to use their payment systems for transactions at their online shops for mobile apps, services, and digital goods, taking a bite of 30 percent or less of transactions as commission.

The tech giants behind rival iOS and Android mobile operating systems maintain the commission is an industry norm and fair compensation for running trustworthy online shops where developers can prosper.

The bite of transactions has been hotly criticized, though, by developers such as Fortnite maker Epic Games and streaming music service Spotify.

“That the bill successfully passed is proof that there is a growing desire to rein in the power of the Big Tech companies that hold sway over key areas of commerce,” said Pat Garofalo, director of US nonprofit State and Local Policy at the American Economic Liberties Project.

“Small businesses exist at the whims of platform monopolies that can arbitrarily crush them overnight, with no warning or recourse, if they don’t agree to turn over a significant cut of their revenue in order to access their own customers.”

The Arizona bill, which has a long way to go before becoming law in that state, would bar major app stores from using a particular payment system for transactions.

While the App Store is the sole gateway for digital content onto Apple devices, users of Android smartphones or tablets can download apps from online venues other than the Play shop run by Google.

Apple chief compliance officer Kyle Andeer had urged Arizona legislators not to pass the bill.

The App Store enables developers to craft an app in their home, then connect with customers around the world, Andeer said in remarks provided by Apple.

“The app economy has boomed as a result,” Andeer told legislators.

“We should be celebrating these successes, not tearing them down.”

About 83 percent of software Arizona developers at the App Store pay no commissions to Apple, and most of those who do pay 15 percent not the 30 percent required for some types of transactions, according to Andeer.

“This bill tells Apple that it cannot use its own check-out lane (and collect a commission) in the store we built,” Andeer said.

“The bill is a government mandate that Apple give away the App Store.”

Similar bills have been introduced in a handful of other US states, including Illinois and New York, according to Garofalo.