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The app stores currently apply a 15 or 30 percent commission fee on apps that cost money or have in-app purchases or subscriptions.
Members of Arizona’s state House of Representatives questioned whether or not Apple was a monopoly last week, ahead of a critical floor vote. Others compared the Apple and Google smartphone app stores to a flea market. And one member applauded Apple’s initiative to control the content on its operating system. This was all in the debate over HB 2005, a bill that passed mostly along partisan lines that will, if made law, eliminate app store commission fees for developers on both the Google and Apple app stores.
For those who have followed the Big Tech debates in Congress, the party of those who sided with the Silicon Valley giants against the antitrust bill may come as a surprise. In the 31-to-29 vote, 25 Democrats voted against HB 2005, while only four voted in favor. Most of the opposition from the House floor came from Democrats.
“I was blown away by the fact that there were Democratic members out there who were carrying water for Apple and Google, using pro-monopoly talking points,” said Geoffrey Esposito, of Arizona’s progressive lobbying firm Creosote Partners, which does not have any clients on this issue. “I was frustrated to hear that considering that this is a priority for progressives on a national scale,” he added, in an interview with the Prospect.
Republican Rep. Regina Cobb, who introduced the bill this February, fielded questions about the market control that Apple and Google have in the smartphone application market and the bill’s relevance to consumers and businesses in Arizona.
The Democrats’ position was clear. “Arizona does not have an interest in this fight. We do not have a dog in this fight,” said state Rep. Diego Rodriguez (D) during the debate. “What we need to do is be focused on policies that are protecting consumers. This bill does not protect consumers. It protects one billion-dollar company from another billion-dollar company. And that is not why we’re here.”
Democrats also argued that this was a federal government issue, a problem for the courts to decide, and it would be better to simply not take a vote.
What the arguments against HB 2005 on the House floor failed to recognize was how Apple and Google’s fees do, in fact, hurt consumers. The app stores currently apply a 15 or 30 percent commission fee on apps that cost money or have in-app purchases or subscriptions. They also force consumers to pay using their Apple or Google accounts. Apple has repeatedly suggested to developers that they just raise prices to shift the fee onto consumers. Developers appear to have complied. For example, a subscription to YouTube Music or Tidal on a cellphone app is $12.99 per month, but if you sign up on a desktop, it’s $9.99. Spotify used to have the same price difference.
U.S. Rep. David Cicilline (D-RI), chairman of the House Antitrust Subcommittee, told The Verge that these Apple- and Google-generated charges are “highway robbery … crushing small developers who simply can’t survive with those kinds of payments. If there were real competition in this marketplace, this wouldn’t happen.”
HB 2005 would give developers and consumers more options for how to pay for their smartphone apps, the internet traffic for which now rivals traditional web browser use. Hey.com executive David Heinemeier Hansson told the Prospect that for his email service company, iOS app users make up 77 percent of his business. Most of the other 23 percent are using the Android app.
Arizona Democrats opposing the bill are at odds with party members in Congress and across the country. Arizona’s bill is the closest to becoming law, but there are similar efforts targeting Apple and Google’s app store control in Hawaii, New York, Massachusetts, Rhode Island, and Illinois—all of which have been introduced by Democrats.
Democrats in the U.S. House also looked into app store market control during a 15-month antitrust investigation.
Esposito says representatives in Arizona may not have been familiar with exactly what HB 2005 would do. But in addition to an irregularly high number of bills this session (about 1,800, compared with 1,300 last year), there’s also been a significant investment in lobbying by Apple and Google.
“It showed the disparity in the power and money behind the lobbying effort there. Everybody in town [has been] snatched up by one of those firms to lobby on this issue,” Esposito says. “The bill moved relatively quickly in the [legislative] process, and I think that coupled with the fact that you had this massive lobbying effort from Big Tech really made it so that the traditional battle lines seem different.”
Arizona Democrats opposing the bill are at odds with party members in Congress and across the country.
Apple has four firms—Goodman Schwartz, Consilium Consulting (the firm of former chief of staff to Gov. Steve Ducey, Kirk Adams), Policy Development Group, and Willetta Partners—supporting its resistance to the legislation, according to a source with knowledge of the situation. Google has hired Summit Consulting, and it may be in talks to sign a second lobbying group, the source explained.
Despite the lobbying, four Democrats did vote for the bill. But the balance of Democratic and Republican support may change again when it comes to a vote in the Senate, Esposito says, as more people learn about the bill and the debates around similar bills in statehouses across the country.
In addition to the bills introduced by Democrats in other state legislatures, there is also a bill in the Georgia state Senate being introduced by a Republican state senator. And even in Congress, there’s the potential for bipartisan support on Big Tech antitrust issues in both houses.
The Coalition for App Fairness, which supported HB 2005 and a similar piece of legislation that failed to pass in North Dakota, said in a statement to the Prospect that it was pleased to see the bill pass in the Arizona House with bipartisan support.
“This is reflective of what we are seeing on the national level and in other states, too. On both sides of the aisle, there is a definite appetite to address the antitrust issues that arise from Apple’s conduct,” said Meghan DiMuzio, executive director of the Coalition for App Fairness, in the statement.
