Arizona Is the Next State Lining Up Against the App Store ‘Monopoly’

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Earlier this month, North Dakota attempted to introduce legislation that would have required Apple to allow third-party app stores and in-app payment systems on its iOS devices within that state. While that bill was ultimately shot down, it looks like it was only the first in what’s shaping up to becoming a multi-pronged approach to end the so-called App Store monopoly.

From the ashes of the North Dakota bill, it also became apparent that this is not something that state legislators are coming up with on their own; not surprisingly, it’s Epic Games and the Coalition for App Fairness that it gave birth to last year that are sending out lobbyists to try and persuade lawmakers to clamp down on the App Store, going so far as to even draft the legislation on behalf of the state senators — many of whom have only a rudimentary understanding of the principles in play here.

A New York Times report from earlier this month revealed that these lobbyists weren’t about to be content to stop at North Dakota, and had in fact already pushed for similar legislation in several other U.S. states, including Arizona, Georgia, Massachusetts, Wisconsin, and Minnesota, and now it looks like Arizona is ready to bring its version of the Coalition’s bill to the table.

In an opinion piece for the Arizona Capitol Times, Republican state representatives Regina Cobb and Leo Biasiucci outline their plans in the form of an amendment to Arizona House Bill 2005 that would prevent Apple from requiring “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.”

Notably, HB2005 was originally a fairly innocuous “housekeeping” bill that pertained to the management of funds allocated to school districts. Cobb’s amendment strikes out the entire existing bill and replaces it with a completely different section that adds a new chapter on “Digital Application Distribution Platforms.”

Focusing on Payment Systems

The Arizona bill doesn’t go nearly as far as the attempt that was made in North Dakota, since in this case, the amendment focuses solely on in-app payments, and says nothing at all about alternative app stores.

Instead, it focuses on both developers and users based in Arizona. Under the proposed new rules, companies like Apple and Google that offer digital application distribution platforms that exceed one million downloads per year would no longer be able to force Arizona-based developers to use only one payment system exclusively in their apps. Further, all developers who want to sell to users in Arizona, regardless of where they’re based, would also need to be free to allow alternative payment options for users residing in Arizona.

The proposed legislation would also prevent Apple from “retaliating” against any developer in Arizona who chooses not to use Apple’s payment system.

While this doesn’t cover the entire scope of what Epic Games is after in its battle with Apple, it definitely lines up with the move that Epic made last summer to start the whole thing — if the legislation were to pass, Epic would be permitted to offer its own in-app payment system, at least for users in Arizona. Further, if Epic chose to move its operations to Arizona, then Apple would need to allow it to offer its own payment system to users worldwide.

While the bill doesn’t directly address alternate app stores, it does go beyond in-app payments, however, since it would also require that developers and users in Arizona be able to use any method to accept payments to “download a software application.” While simply opening up the rules for in-app payments would be trivial for Apple to do from a technical point of view, having to comply with the second part would require a fundamental change to how the App Store operates right now.

What’s also interesting is that the legislation specifically carves out an exception for “special-purpose digital application distribution platforms” — in other words, things like game consoles and music players, which have long charged the same 30 percent commission as Apple, would be completely exempt from these new requirements. The reasons for why this is somehow okay still mystify many people, and in this case, the legislation offers no rationale to support this distinction.

Political Posturing

Ultimately, however, even though the bill seems slightly less draconian than what was on the table in North Dakota, it still seems like little more than posturing on the part of state politicians, who are trying to portray this as a way to help Arizonans and small businesses by “fighting Big Tech,” yet at the same time citing examples of other multi-billion dollar big tech companies like Epic Games and King as being the underdogs — “small app developers” who “have to absorb the cost and struggle to survive or pass the tax onto their consumers.” 

But while many of us in elected office are trying our best to support small businesses, Big Tech companies are using their power to fight us. Right now, Candy Crush and Fortnite are at their mercy, and so are Arizonans who play those games.

Arizona state Reps. Regina Cobb and Leo Biasiucci

And they can actually say it with a straight face.

Fortunately, it seems unlikely that the Arizona bill is going to have any more success than the attempt that was made in North Dakota. As things stand right now, you can view the Current Bill Positions — a list of those who are for it and against it — on the Arizona legislature’s website, and to say that its unbalanced would be an understatement. While the “For” section does contain its far share of supporters, it’s followed by a massive “Against” section that’s at least 10 times longer.

Still, it goes to show how Epic Games and the Coalition for App Fairness aren’t slowing down in their attempts to get lawmakers to see things their way. Whether they’ll eventually have any success remains to be seen, but repeated failures of lawmakers to pass legislation supporting their position likely won’t bode well when they finally do square off directly against Apple in court later this year.

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