Did Apple Make This Arizona App Store Bill Quietly Go Away?

Arizona State capitol with bell Credit: Joseph Sohm / Shutterstock
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Over the past few weeks, several U.S. states have been considering the passing of legislation that would force Apple to open up its App Store to third-party payment systems, and possibly even force the iPhone maker to allow alternative App Stores. Naturally, Apple has been lobbying hard to oppose these bills on every front, and it’s ultimately becoming a cat-and-mouse game with state legislatures — and voters — stuck in the middle of two Goliaths.

On the one side, of course, there’s Apple, the multi-trillion-dollar company that makes the iOS hardware and software in the first place, and runs the App Store by extension, policing it in the name of privacy, security, safety, and performance. In the other corner of the ring is the Coalition for App Fairness, a group of developers who oppose Apple’s ironclad control of the App Store and the entire iOS ecosystem.

While the Coalition would like lawmakers to believe that it’s the David in this battle, the reality is that it’s made up of several multi-billion dollar developers. It was basically founded by Fortnite creator Epic Games shortly after it declared war on Apple, and has a number of other high-profile developers who are well-known opponents of the App Store, including Spotify and Match Group (the company behind online dating services such as Tinder and OkCupid).

To be fair, the Coalition includes a considerable number of smaller developers as well, including PrePear, the small indie dev that recently found itself embroiled in a trademark dispute with Apple, along with clearly successful but privately held companies like BaseCamp, which went up against Apple last year over the approval of its “Hey” email app, and Tile, which has an entirely different axe to grind.

The Coalition has a fairly long list of issues with the App Store, and it’s unclear if every member shares the same priorities, although presumably any company that’s signed on has to agree with at least most of them, if not all.

However, the main issue that the group seems to have been pushing for over the past few months is directly aligned with Epic’s original motivations for going to war with Apple in the first place.

Last year, before its fight with Apple became public, Epic Games CEO Tim Sweeney asked the iPhone maker to offer “competing payment processing options other than Apple payments, without Apple’s fees,” and “a competing Epic Games Store app” to be made available through the iOS App Store and also “through direct installation that has equal access to underlying operating system features” as the Apple’s own App Store.

It’s unlikely that Sweeney was ever naive enough to believe that Apple would say yes to his request, but clearly it was intended to set the stage for what was to come when Epic eventually filed its lawsuit against Apple a few weeks later.

However, not content to fight its battle simply in the civil court system, Epic is using the Coalition for App Fairness to try to lobby individual states to pass legislation that would force Apple’s hand — at least in those states.

Enter Arizona

The first such legislation appeared in North Dakota last month, however it was ultimately shot down, and in the process it became obvious that the Coalition’s fingerprints were all over it.

A lobbyist for the Coalition, Lacee Bjork Anderson, not only successfully persuaded at least one North Dakota senator to introduce the legislation, but she went so far as to basically gift him the exact draft of the legislation that should be proposed.

In other words, it’s the Coalition for App Fairness that’s writing these laws, and simply working to convince local state representatives to introduce the bills into their legislatures.

While lobbying efforts have been ongoing in several other states, it was Arizona that was next in line to actually table the legislation.

Last month, two Republican state representatives introduced a slightly softer version of the North Dakota bill, focusing on payment methods rather than the creation of independent App Stores.

The bill was being proposed by the political forces behind it as “fighting Big Tech,” but it came across as more than a little disingenuous when it tried to paint Epic Games and King (makers of Candy Crush) as “small app developers” who were “at the mercy” of Apple.

If successful, Arizona’s bill would have forced Apple to allow developers and users in the state of Arizona to use alternative payment methods, both for in-app purchases and for downloading software applications. However, it also inexplicably carved out a special exception for “special-purpose digital application distribution platforms” like game consoles, who would be fully exempt from the new requirements.

The Bill Mysteriously Vanishes

While the bill didn’t originally seem like it was going to gain much traction, it actually did squeak by the Arizona House of Representatives earlier this month in a narrow 31-29 vote. Ironically, it wasn’t the “big business” Republicans who opposed the bill, but rather several Democratic representatives.

Several Democrats publicly objected to the bill based on the grounds that it was potentially unconstitutional for a state to attempt to regulate interstate commerce, along with the fact that they felt it was injecting Arizona into the dispute between Epic Games and Apple, which is up to the courts in California to decide upon.

However, it now seems that the Arizona bill has mysteriously vanished, and proponents of the law are accusing Apple of being behind its disappearance.

As The Verge reports, Arizona’s State Senate was scheduled to vote on the bill yesterday — in fact, it was listed first on the docket — and yet, when the session began, it was simply passed over and ignored without any explanation, as if it was never there in the first place.

So far, nobody has commented publicly as to why this has happened, but extremely vocal Apple critic David Heinemeier Hansson, the founder of BaseCamp and an active lobbyist against the App Store, has a theory.

Hansson, who submitted testimony supporting the bill, claims that it was “killed in mid-air with a backroom deal.” Specifically, Hansson says that Apple hired a former chief of staff to Arizona Governor Doug Ducey to broker a deal that stopped the bill dead in its tracks.

It’s unclear where Hansson is getting his information, and therefore how accurate it may be, as nobody else seemed to be saying much of anything about it. Apple has naturally declined to comment, and multiple Arizona lawmakers, including Rep. Regina Cobb, who sponsored the bill, along with the Arizona governor’s office and the office of the Arizona State Senate Majority Leader Rick Gray have simply not responded to any requests for comment from The Verge.

Of course, it’s a well-known fact that Apple and Google, which would also be impacted by this new law, have been lobbying very heavily against the bill, which not only potentially threatens their business model in that state, but also risks setting a precedent for others to follow.

If the bill passed and ended up being signed into law in Arizona, Apple would either have to significantly restructure the App Store or find a way to stop doing business in Arizona altogether. However, since the law encompasses both developers and users in Arizona, it could potentially get very complicated. It’s more likely that Apple’s lawyers would succeed in getting an injunction while challenging the law, tying up the courts for years to come.

Either way, however, it’s far better if Apple can just head the whole thing off at the pass. According to a recent report from Protocol, Apple and Google had hired “almost every lobbyist in town,” according to Rep. Cobb, including Kirk Adams, the former chief of staff that Hansson is mostly likely referring to in his tweet.

According to Protocol, Adams’ task was to negotiate with Cobb on behalf of Apple to attempt to convince her to withdraw the bill. Apple also joined the Arizona Chamber of Commerce, which had already come out against the bill, and sent its lawyers to argue the case that the bill is unconstitutional in the first place.

While the Coalition and other proponents of “App Store Fairness” are naturally unhappy with Apple’s so-called “backroom dealings,” it’s worth keeping in mind that the entire process was started by a group of paid lobbyists in the first place. The Coalition hired Ryan O’Daniel, a lobbyist that Rep. Cobb had worked with before and trusted, who managed to convince her that the bill would create new economic opportunities in Arizona.

This was no doubt based at least partly on the theory that developers would flock to the state as a safe haven against Apple’s 15-30 percent App Store commission. Hansson said as much during the battle over the North Dakota bill, telling the New York Times last month that he was prepared to move himself and all of his company’s operations to North Dakota if the law had passed in that state, and that many other companies would likely join him.

‘Very Ugly’ Tactics

In the case of the Arizona bill’s disappearance, Hansson has hinted at corruption, suggesting that Apple had bought off some of the legislators in the state.

However, the Danish tech entrepreneur is also known for his somewhat incendiary statements, so it’s fair to say that this one should be taken with a grain of salt. He’s gone up against Apple on multiple fronts over the years, from App Store commissions to Apple Card discrimination, and he’s not known for mincing words.

As 9to5Mac notes, however, analyst Neil Cybart is offering a somewhat more believable explanation, stating that the Coalition and Epic pushed through a bill that nobody really understood.

Cybart goes on to call the lobbying out as “very ugly behavior and tactics,” and it makes sense as it resonates with exactly what North Dakota senators said last month. According to North Dakota’s Kyle Davison, he was handed prepared draft legislation by a Coalition lobbyist, who argued that small businesses would be harmed by the big tech giants, but he really didn’t understand much more about it.

Similarly, state senator Jerry Klein, who chaired the committee overseeing the proposed bill, was a 69-year-old retired grocery store owner who openly admitted that he and his colleagues weren’t keen on passing a bill that they didn’t fully grasp. So, when Apple and Google came along and presented the other side of the argument, it really wasn’t hard to convince them that maybe the whole thing wasn’t such a good idea in the first place.

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