Creative Commons
The Arizona State Capitol in Phoenix
Big Tech lobbyists in Arizona caused just enough confusion over an app store reform bill to run out the clock on this year’s legislative session. The bill would have ended the practice of app developers being charged high fees for payment processing by Google and Apple, the two dominant cellphone operating systems.
After being hotly debated and passing along near-partisan lines in the state House, HB 2005 was then put on the agenda for the state Senate Commerce Committee but ultimately not given a hearing. Friday was the last day the bill could be heard by the committee.
With witnesses cued in the Zoom meeting to testify for and against the bill, an hour and a half into the last committee hearing of the year, it was announced that HB 2005 would not be heard. Commerce Committee Chair J.D. Mesnard, a Republican representing state Senate District 17, says he wouldn’t normally put something on the agenda and then not call it, but during the hearing, he made a last-minute decision to “hold” the bill.
“I polled the committee members and there just wasn’t enough support for it,” Mesnard told the Prospect in an interview. “A number of members were conflicted on it, others were just opposed. There was some support for it, but it definitely was coming up short.”
HB 2005 passed the Arizona House with mostly GOP support and Democratic opposition. On the House floor, Democrats voiced their support for Big Tech, repeating pro-industry talking points against reforming the app store monopoly held by Apple and Google. But Arizona Rep. Regina Cobb’s bill passed 31-29, with all but four Democrats voting against it.
Once the bill got to the state Senate, people following HB 2005 saw Republican support for HB 2005 wane. In a session with a historic number of bills being proposed and a uniquely heavy lobbyist presence, votes in support for the bill did not materialize as they did early on.
“I felt it was an interesting issue, it wasn’t really a partisan issue, I thought folks should be afforded the opportunity to learn about it and vote their conscience,” Mesnard says. “It was an issue that would take a while to dig into, I had dug into it by virtue of lots of discussions on both sides, being the chair. But I am certain it wouldn’t have passed so I didn’t want to go through all of that for a bill that wouldn’t make it.”
Mesnard says there was only one definite “yes” vote for the bill on Wednesday night. Most others claimed to be undecided, Mesnard adds, including himself. But this was not for a lack of education on the subject. Apple and Google hired at least six lobbying firms to drum up opposition to the app store reforms, and their teams were able to contact many members of Arizona’s state government.
“[HB 2005] was one of those bills where I kept having members on both sides of the aisle coming to me and going, ‘Are you hearing that Apple bill?’ and it’s not just an Apple bill, but, you know, as shorthand,” Mesnard says. “So when you have members start coming to you before you even schedule a bill and asking about one that’s been assigned to my committee, that’s relatively unusual. So what that means is the lobbyists were doing their best and they had talked to all these members.”
Mesnard’s decision to hold HB 2005 did save the committee time debating a bill that he says would not have passed anyway, but it also gave members a cover from having to publicly vote one way or the other.
“Everybody gets to claim they were going to be on the right side of this issue,” a person familiar with the legislation told the Prospect. “When those legislators don’t have to take a position then they get to make everyone happy.” Republicans could avoid upsetting the original bill sponsor, Rep. Cobb, whose role on the House Appropriations Committee is important to passing state budgets. And Democrats in the Senate did not have to contradict their peers in the House by voting for it.
The hold also prevents Republican Gov. Doug Ducey from having to weigh in on the Big Tech debate occurring within the GOP. One of the first lobbyists hired by Apple to work against HB 2005 was Ducey’s former chief of staff Kirk Adams, who was also previously a Republican Speaker of the House. “His engagement is a very clear sign that the governor did not want this coming to his desk; he wanted this to go away,” the source said.
The governor’s deputy communications director said that it is “long-standing policy that we do not comment on pending legislation,” when asked for comment. The Prospect then asked if Adams’s relationship with Gov. Ducey may have been a contributing factor to the bill being held, to which there has been no reply.
Kirk Adams also did not reply to the Prospect’s request for comment.
While this is probably the end of the road for Arizona’s battle against Big Tech, it is not the end of attempts to reform the app store system in statehouses across the United States.
There was a chance that HB 2005 could be voted on in next week’s House Appropriations Committee hearing, which will be the last committee hearing of the session. But the bill would have needed to be on the committee agenda by 5 p.m. Arizona time Friday. And the Senate obstacle would remain.
Bills in Arizona also do not automatically carry over to the next legislative session, which would begin next January (unless there is a special session this fall). Bill sponsor Cobb’s office did not respond to the Prospect’s request for comment.
While this is probably the end of the road for Arizona’s battle against Big Tech, it is not the end of attempts to reform the app store system in statehouses across the United States. Developers remain committed to fixing the inequity whereby Apple and Google take large shares of their revenues as a toll for accessing their cellphone users.
New York, Illinois, Massachusetts, and Georgia all have app store reform bills at different stages of the legislative process proposed by both Democrats and Republicans. Those legislatures have had the opportunity to watch the power of lobbying and the importance of education needed on app store reform bills in both the states of Arizona and before that North Dakota.
These bills are all still in committee, but votes could come in the next several weeks, depending on each state’s legislative cycle (in some states, the legislature meets for just a few months, and in other states, the legislators work full time).
In Georgia, the fate of app store reform will be decided as soon as next Wednesday (the final day to bring it up this session). Republican Rep. Kasey Carpenter introduced his legislation after first hearing about the issue from his kids who play Fortnite, a video game owned by Epic Games, one of the companies that is leading the way for app store reform. Carpenter told the Prospect that his bill has already been nicknamed “the Lobbyist Employment Act of 2021” because it is drawing so much attention and lobbying activity.
Rep. Andy Vargas, of Massachusetts, has the benefit of being a full-time legislator, so his bill doesn’t have the time pressure of internal hearing deadlines, like in Arizona and Georgia. Vargas tells the Prospect that the goal right now is to build grassroots support for the bill and help legislators get educated on this issue. He adds that some in Massachusetts have already heard from Apple and Google, and he fully anticipates a robust lobbying effort against the bill as it gets closer to hearings and votes. Google and Apple both have corporate offices in Cambridge, Massachusetts.
New York and Illinois also have full-time legislatures, where their respective app store reform bills will have more time to be debated and build support.
Mesnard concedes that some on his committee could have been influenced by lobbyists. But he says that, after meeting with influencers from both sides, he remained persuadable in either direction. He adds that the lobbying may have also started to have an inverse effect on some legislators.
“In this particular case, Big Tech had the advantage but in some ways you kind of expect that,” Mesnard says. “It works to their advantage and it works to their disadvantage because it just reinforces the idea that they have all these resources that they can just throw at something and overwhelm the little guy. That doesn’t help their image.”
