Arizona bill that could force Apple App Store to allow third-party payments one step close...

Posted:
in General Discussion edited March 3
Arizona lawmakers have narrowly advanced a bill that could force Apple and Google App Stores -- but not video game console sellers -- to allow third-party payment systems on their app stores.

Credit: James Yarema/Unsplash
Credit: James Yarema/Unsplash


The Arizona House of Representatives on Tuesday voted 31-29 to pass the legislation, an amendment to the existing House Bill 2005. It's now slated for a vote before Arizona's Senate.

The HB2005 amendment bars companies whose downloads in Arizona exceed 1 million from requiring specific in-app payment systems as the sole way to accept payments. It also prohibits companies from retaliating against app makers who do use a third-party payment system.

An amendment to the bill that would apply it to game consoles failed by a voice vote on Tuesday. The original text includes a carve-out that excludes game consoles. Another amendment that would offer savings from the bill to be given back to consumers also failed.

Currently, third-party payment systems are prohibited under Apple App Store guidelines. A third-party payment method would bypass the 30% or 15% cut of app and in-app purchases that Apple takes. Google also takes a similar commission on the Play Store.

The Arizona bill, introduced in February, narrowly passed the Arizona House Appropriations Committee. In the wake of its approval, Apple and Google have reportedly ramped up lobbying efforts against the bill.

At a hearing in February, Apple compliance officer Kyle Andeer likened the HB2005 amendment to a "government mandate that Apple give away the App Store."

Reportedly, the co-sponsors of the bill, Arizona State Representatives Regina Cobb and Leo Biasiucci, were first presented the idea by a lobbyist representing Match Group and the Coalition for App Fairness.

"The Coalition for App Fairness is pleased to see the House passage of #HB2005, which will encourage business innovation in Arizona and protect consumer choice," the group said, shortly after advancement of the bill. "While this is cause for celebration, it is only a first step toward achieving a truly level playing field for all."

The legislation is similar to a bill that was presented to state lawmakers in North Dakota by an Epic Games and CAF lobbyist. That bill, which would have also forced companies to allow third-party app stores, ultimately failed. It also featured a carve-out for game consoles that included nearly identical text.

Although the bill has passed by voice vote, some Arizona lawmakers expressed their doubts about the legislation. "This bill comes to us in a very rushed manner on a justification that isn't supported by the data," said State Rep. Diego Rodriguez. "This is not a situation that calls for government interference. It is an invasion. We do not have a monopoly situation."

The Arizona amendment is just one part of what appears to be a multi-state campaign against Apple carried out by the CAF, which represents companies that have rallied against the Cupertino tech giant in the past. Similar bills have been introduced in Georgia, Hawaii, and Minnesota.

Some members of the CAF include Epic Games, which launched a campaign against Apple to protest its 30% cut of in-app purchases. That campaign kicked off when Epic baited Apple into removing "Fortnite" from the App Store by implementing a direct payment system in violation of Apple's guidelines.

Seemingly in response to criticism of its App Store commission, Apple in 2020 debuted a program reducing that fee to 15% for developers making less than $1 million on the App Store.
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Comments

  • Reply 1 of 51
    So what does this mean? Could a decision in one state end up affecting the whole world?
  • Reply 2 of 51
    DoctorQDoctorQ Posts: 20member
    Uninforcible.
    williamlondonjahbladewatto_cobra
  • Reply 3 of 51
    Apple should close its App Store in Arizona.
    genovelleviclauyycminicoffeedocbburkMisterKitjahbladewatto_cobra
  • Reply 4 of 51
    Mike WuertheleMike Wuerthele Posts: 6,089administrator
    So what does this mean? Could a decision in one state end up affecting the whole world?
    Depends on how Apple decides to change, if the bill is passed. It can easily geolock to one state for one law. Or, it can pull app store development privileges out of Arizona entirely.

    It'll be tied up in legal actions for years, regardless.
    kelemorqwerty52sdw2001minicoffeeMisterKitwatto_cobra
  • Reply 5 of 51
    maximaramaximara Posts: 302member
    So what does this mean? Could a decision in one state end up affecting the whole world?
    It may mean nothing since Apple is an interstate company putting it under Article 1, Section 8, Clause 3 of the U.S. Constitution which states "[The Congress shall have power] To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;"  The Federal courts or FTC could through this law out the window if it is passed.
    80s_Apple_Guyhammeroftruthradarthekatwatto_cobra
  • Reply 6 of 51
    geekmeegeekmee Posts: 452member
    I don’t understand why Apple just doesn’t kick out of the App Store any app that has made a DECISION to go along with the Arizona law rather than Apple’s App Store Guidelines???

    It’s on the app to make the decision, not Apple.
    edited March 3 watto_cobra
  • Reply 7 of 51
    maximara said:
    So what does this mean? Could a decision in one state end up affecting the whole world?
    It may mean nothing since Apple is an interstate company putting it under Article 1, Section 8, Clause 3 of the U.S. Constitution which states "[The Congress shall have power] To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;"  The Federal courts or FTC could through this law out the window if it is passed.
    My understanding is that Congress would have to step in to prevent this regulation.  The Commerce clause leaves states free to regulate commerce to the extent that they don't interfere with Federal regulations.
  • Reply 8 of 51
    geekmeegeekmee Posts: 452member
    So what does this mean? Could a decision in one state end up affecting the whole world?
    Nope. It’s not on Apple to make a decision. 
    Apple has already given their guidance to be included in the App Store.

    It’s now up to individual apps to make their decision to opt out of Apple’s guidelines and implement their own payment system rather than pay Apple’s 30%. 

    This potential Arizona legislation doesn’t force Apple to do anything.
    edited March 3 iyfcalvin
  • Reply 9 of 51
    lkrupplkrupp Posts: 8,881member
    The Constitution gives the power to regulate commerce exclusively to the federal government. Just imagine the chaos if every state had its own rules for commerce. It would be impossible for any company to operate in all fifty states. 
    viclauyycwilliamlondonjahbladewatto_cobra
  • Reply 10 of 51

    Here's the text of the bill.  I've cleaned up the difficult-to-read all-caps, but otherwise this is verbatim from https://apps.azleg.gov/BillStatus/BillOverview/74279?SessionId=123

    I've highlighted the relevant section describing how this would interpreted/enforced.

    18-701. Digital application distribution platforms; prohibitions; exception; attorney general; definitions
    A. 
    A provider of a digital application distribution platform for which cumulative downloads of software applications from the digital application distribution platform to Arizona users exceed one million downloads in the previous or current calendar year may not do any of the following:
    1. Require a developer that is domiciled in this state to use a particular in-application payment system as the exclusive mode of accepting payments from a user to download a software application or purchase a digital or physical product or service through a software application.
    2. Require exclusive use of a particular in-application payment system as the exclusive mode of accepting payments from Arizona users to download a software application or purchase a digital or physical product or service through a software application.
    3. Retaliate against a developer that is domiciled in this state or an Arizona user for using an in-application payment system or digital application distribution platform that is not owned by, operated by or affiliated with the provider or retaliate against a developer for that use to distribute applications to or accept payments from Arizona users.

    B. This section does not apply with respect to special-purpose digital application distribution platforms.

    C. The attorney general may receive complaints and investigate violations of this section and may bring an action in any court of competent jurisdiction to obtain legal or equitable relief on behalf of a person aggrieved by the violation.

    D. Any person aggrieved by a violation of this section may commence a civil action on the person's own behalf in any court of competent jurisdiction to obtain legal or equitable relief, including reasonable attorney fees and costs.

    E. An action may not be commenced under subsection d of this section until sixty days after the plaintiff has given notice of the alleged violation to the attorney general.  An action may not be commenced under subsection d of this section if the attorney general has commenced and is diligently prosecuting an action in court arising from the same alleged violation.

    F. For the purposes of this section:
    1. "Arizona user" means a user whose most recent address shown in the records of a provider is located within this state.
    2. "developer" means a creator of software applications that are made available for download by users through a digital application distribution platform or other digital distribution platform.
    3. "digital application distribution platform":
    (a) means a digital distribution platform for applications and services that are provided to users on general-purpose hardware, including mobile phones, smartphones, tablets, personal computers and other general-purpose devices that are connected to the internet.
    (b) includes a digital distribution platform that is provided or used for only certain types of devices, such as certain grades of computing device, devices that are made by only a particular manufacturer or devices that run a particular operating system.
    4. "domiciled in this state" means a person that conducts in this state the substantial portion of work to create or to maintain digital applications.
    5. "in-application payment system" means an application, service or user interface that is used to process payments from users to developers for software applications and digital and physical products and services distributed through software applications.
    6. "provider" means a person that owns, operates, implements or maintains a digital application distribution platform or an in-application payment system.
    7. "special-purpose digital application distribution platform" means a digital distribution platform established primarily for use by public safety agencies or for single or specialized categories of applications, software and services that are provided to users on hardware intended primarily for specific purposes, including gaming consoles, music players and other special-purpose devices that are connected to the internet.
     
    viclauyyc
  • Reply 11 of 51
    mcdavemcdave Posts: 1,568member
    Wow, if Government can be do easily played by self-entitled geeks, who else is playing them?
    williamlondonwatto_cobra
  • Reply 12 of 51
    What's interesting and alarming about the text of the bill is that there is no ramp-up period.  Apple would have to react immediately upon this bill passing.  Apple is likely spending (wasting) millions of dollars of staff time and legal fees preparing for this possibility.
    watto_cobra
  • Reply 13 of 51
    aderutteraderutter Posts: 433member
    Without a doubt Apple will not change tactic. Apple will not allow apps into the app store that violate the guidelines and use a 3rd party in-app payment method.

    Apple will simply not approve apps submitted that do not adhere to the guidelines and any that slip through will be removed when discovered.

    Apple would rather this go to the highest court in the land over the course of years if need be.

    Trying to force a store owner to let someone sell their wares free of charge in your shop - what a joke.

    If these jokers do eventually get their way then in-app payments will disappear entirely and we will go back to outright purchase of software - and in my opinion that would actually be a good thing. 
    genovelleviclauyycdewmeMisterKitdanoxsbwolvesjahbladewatto_cobra
  • Reply 14 of 51
    KuyangkohKuyangkoh Posts: 615member
    Bring in Malware, ready?? GO
    watto_cobra
  • Reply 15 of 51
    How can they regulate what is clearly interstate commerce? 
    d_2watto_cobra
  • Reply 16 of 51
    This law is so brain dead it's sickening. So what's the difference between Apple/Google and Sony/Microsoft/Nintendo for in-game purchases? Answer: they're not Apple or Google.

    The question I have is that in the context of this legislation,  who does the software distribution? The expectation should not be that Apple should do it for free. I'm not a lawyer - but the way this reads any attempt for Apple to charge for use of its distribution infrastructure or deny the use of it since Apple receives no revenue could be interpreted as "retaliation" 

    Would it also be considered "retaliation" if Apple decides not to do business with a developer because Apple does not make money on the relationship?
    edited March 3 viclauyycd_2MisterKitrandominternetpersonsbwolveswatto_cobra
  • Reply 17 of 51
    sdw2001sdw2001 Posts: 17,382member
    As Mike said, this will be tied up in litigation for years. I personally think the law is idiotic. It’s unenforceable and probably unconstitutional for a whole host of reasons.  It seems to me it steps on the federal government‘s ability to regulate interstate commerce as well as anti-trust law.  The targeting of just two companies (obviously) is extremely problematic from a legal perspective.  We’ll see.  
    watto_cobra
  • Reply 18 of 51
    qwerty52qwerty52 Posts: 267member
    This is ridiculous!
    Why I have the feeling, that Arizona lawmakers just don’t know the difference between “Apple Store”  and “AppStore”. 
    They only can put restrictions on a physically existing Apple Store in Arizona, but not on 
    AppStore, which is a worlds virtual internet store. There isn’t such thing as only Arizona AppStore.
    So Apple can always pool out world wide, all applications which  doesn’t respect the AppStore’s rules.
    And what the lawmakers are doing now (while spending taxpayers money) is trying to smack hole in the water!
    watto_cobra
  • Reply 19 of 51
    flydogflydog Posts: 890member
    sdw2001 said:
    As Mike said, this will be tied up in litigation for years. I personally think the law is idiotic. It’s unenforceable and probably unconstitutional for a whole host of reasons.  It seems to me it steps on the federal government‘s ability to regulate interstate commerce as well as anti-trust law.  The targeting of just two companies (obviously) is extremely problematic from a legal perspective.  We’ll see.  
    I oppose the law too, but you can't name a single reason why this is "probably unconstitutional."

    muthuk_vanalingamwilliamlondonrandominternetperson
  • Reply 20 of 51
    flydogflydog Posts: 890member

    qwerty52 said:
    This is ridiculous!
    Why I have the feeling, that Arizona lawmakers just don’t know the difference between “Apple Store”  and “AppStore”. 
    They only can put restrictions on a physically existing Apple Store in Arizona, but not on 
    AppStore, which is a worlds virtual internet store. There isn’t such thing as only Arizona AppStore.
    So Apple can always pool out world wide, all applications which  doesn’t respect the AppStore’s rules.
    And what the lawmakers are doing now (while spending taxpayers money) is trying to smack hole in the water!
    Wrong. Plenty of states, including Arizona, regulate activity that occurs purely over the internet. The most common are internet crimes such as transmitting child porn, fraud, and money laundering. States can collect taxes for activity that occurs purely over the internet. States also regulate advertising that occurs purely over the internet.  States can prohibit employment discrimination by companies that have no presence in their state and accept applications over the internet.  Online gambling is illegal in most states, including Arizona.

    The fact that something occurs over the internet does not make is per se beyond the reach of a state. That is simply absurd on its face. 

    The only plausible argument here is that there is a federal law that expressly preempts state law (no one has pointed to such a law) or that there is a conflct between state and federal law (the more likely scenario, but not one has articulated a cogent argument to support this is the case).

    edited March 3 muthuk_vanalingamwilliamlondonelijahgrandominternetperson
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