Arizona bill that could force Apple App Store to allow third-party payments one step close...
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
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.
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.
Comments
It'll be tied up in legal actions for years, regardless.
It’s on the app to make the decision, not Apple.
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%.
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.
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.
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?
Why I have the feeling, that Arizona lawmakers just don’t know the difference between “Apple Store” and “AppStore”.
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).