This month, House and Senate lawmakers introduced the Open App Markets Act, a bill that, if enacted, will substantially change how Google and Apple run their app stores and mobile operating systems. The bill is one of many recent antitrust efforts, all of which target technology companies and attempt to dictate how private businesses should operate. And just like the rest of these misguided efforts to radically expand antitrust law and enforcement, it spells bad news for consumers.
The bill’s sponsors take aim at how “covered companies” like Apple and Google run their app stores, especially their requirements for in-app payment systems. Their standard 30% commission is admittedly high and burdensome, especially for smaller and independent software developers. In an effort to avoid scrutiny, Apple reduced its cut to 15% for developers who earn less than $1 million in annual sales per year from all their apps. A step in the right direction, though not enough to appease lawmakers.
That being said, the Open App Markets Act goes too far in its attempt to fix these problems. For example, the “exclusivity and tying” section of the bill prohibits covered companies from requiring the use of their own payment systems. The introduction of third parties for payment functions will, among other consequences, open the door for potential security issues and vulnerabilities. As a result, covered companies will need to do more to keep their app stores and devices secure — a cost that will inevitably be passed onto consumers.
The bill would also force companies to allow “sideloading,” a process by which users download and install apps from unofficial app stores. Apple prohibits this practice, citing security and privacy concerns. According to Apple CEO Tim Cook, sideloading would “destroy the security of the iPhone, and a lot of the privacy initiatives that [they’ve] built into the App Store.” Even Google, who allows for apps to be downloaded from unofficial stores, warns against it: “Sideloading Google’s apps carries a high risk of installing an app that has been altered or tampered with in ways that can compromise user security.”
While there is some justification for reform, this bill misses the mark. The Open App Markets Act, like many other antitrust proposals before it, aims to enhance the position of Apple and Google’s competitors, while considerations for consumers come secondarily or not at all. Lawmakers seem to be more concerned about “levelling the playing field,” a euphemism for redistributing profits among competitors and allowing the government to pick winners and losers in the market.
The biggest winners here are developers, who will benefit the most from the proposed legislation. It loosens the rules that restrict them and blunts covered companies from being able to decide who they want to do business with and how. As the Supreme Court affirmed a century ago, antitrust is not meant to restrict the long recognized right of a private business to freely "exercise his own independent discretion as to parties with whom he will deal.”
The bill focuses too heavily on the rights of competitors, when it should be concerned with the buyer’s best interests. After all, antitrust law is intended to protect consumers from anticompetitive and predatory business practices, not maximize the profits of any particular company.
This conflict between Apple, Google, and developers shouldn’t have made its way to Congress. These concerns are already being addressed by the courts — and they should stay there. In Epic Games, Inc. v. Apple Inc., video game developer Epic is contesting that Apple's in-app payment and distribution policies are anticompetitive.
The Open App Markets Act errs by dictating the granular methods and means by which companies should run their businesses. Although not as problematic as other antitrust bills, this proposal goes too far in an effort to address unpopular practices.
