Google and Apple paint an apocalyptic picture of the consequences of the Open App Markets Act. They are quick to say that their walled garden app stores are necessary for our security and privacy. But the reality is that they are greedy, monopolistic rent-seekers, terrified at the prospect of being forced to open their platforms, and, most importantly, parting ways with several billion dollars of pure profit.
Most people don’t realize that Apple and Google collect 30% of every app store purchase, microtransaction and subscription. And while both have stepped in to reduce that to a “generous” 15% in some cases, this feint toward self-regulation still leaves a lot to be desired.
While still in the introduction phasethe Open App Markets Act would, if adopted, essentially dismantling the app market duopoly owned by Apple and Google. This act is a cog in a larger wheel of reform, the American Innovation and Choice Online Actthat focuses on large technology companies for violations of antitrust law and consumer choice.
It will bring app developers countless wins, as well as anyone interested in curbing anti-competitive behavior in the free market (hint: most of us should be). The biggest change would be that Apple (or similar companies) can no longer require developers to use or enable in-app purchases as a condition of app distribution. App stores can no longer do that either require price comparison of hosted apps.
It also prohibits punitive action against developers for using different pricing terms. And it means that app stores can’t stop developers from talking directly to their users about alternative pricing or payment methods. Phones would no longer go to the manufacturer’s app store by default, and developers would have extra protection against competitors who use non-public information to develop copycat apps. Finally, the law would force Apple to allow sideloading and alternative app stores, like the ones we might see for game platforms like Steam and Epic. You understand why Apple is lobbying so hard against it.
The law would have huge implications for major tech companies and technology regulations, and it could change the outcome of some current cases. At this time, Epic Games is calling on the Epic vs Apple decision from 2021. The lawsuit arose from Epic Games’ circumvention of the 30% processing fee that Apple imposes on all developers for in-app purchases. Epic drove users of Fortnite to purchase its in-game currency directly from Epic Games instead of Apple’s App Store payment system. Apple demanded that Epic update its app and eventually removed Fortnite from the store when Epic refused. The judge ruled in Apple’s favor, stating that Epic did not suffer irreparable damage from the removal of the app store.
Taxing the hard work and innovation of others in app development feels intrinsically unfair and, frankly, irritating. That is what this act stands up to, and That is exactly why Epic has sued Apple and is appealing the ruling. Another purpose of the law is to regulate big tech and protect the future of technology. It’s the Wild West now, and that’s how companies like Apple, Google, and Amazon have monopolized the industry until now.
The new law would level the playing field: both app developers and consumers would have alternative ways to distribute and download apps. the dreaded “Apple tax” would no longer be mandatory, as app stores would no longer be able to force people into in-app purchases for subscriptions. This would change the market economy of the App Store itself and give a boost to startups, who are no longer captivated by the 30% levy.
It’s worth labeling Apple and Google’s fear mongering around this act as just that. We already have a perfect example of the opposite on our computers: Windows and OS X allow us to install and run any software we want. Apple and Google claim that their mobile operating systems are intrinsically and inviolate also an ecosystem, but that is simply not true.
Even if the Open Markets Act is passed, I don’t foresee a massive shift of consumers from major app stores to their devices. The first-party integrations still offer a number of nice features, namely ease of cancellation and certain privacy enforcement. Passage, however, would set in motion a sea change in mobile gaming. Apple and Android both get a significant chunk of their revenue from mobile gaming, and if they’re forced to allow Steam and Epic on their phones, they won’t be happy. Perhaps more importantly, the change around in-app purchases will empower a new generation of startups.
Right now, power is in the hands of Congress. The language and details of the bill are swinging the fences by removing the requirements for in-app purchases and allowing third-party app stores to emerge. Law enforcement allows plaintiffs (app developers) to act aggressively against app stores. Essentially, as an app developer, you could follow in Epic Games’ footsteps and point out how in-app purchases and other existing app store rules and restrictions prevented your success and then sue for damages for it. The ability of app developers to sue is a game changer.
What this act essentially boils down to to me is that taxing someone else’s innovation and creativity is wrong and limiting what we can install on our devices feels anti-competitive. The Big Tech companies have been a little too comfortable with the huge profits they have reaped; with this act they will have to take on the underdogs.
Chris Cardinal is one of the founders of Synapse Studios.