North Dakota Wants to Force Apple to Allow Alternate App Stores

North Dakota Senator Credit: The Bismarck Tribune
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Apple has been under fire from several directions over the past year or so when it comes to the iPhone and iPad app economy, but now it looks like the company may be facing a new challenge from a rather unusual corner: North Dakota.

By now you’re probably aware of Apple’s ongoing war with Epic Games, which launched a massive lawsuit accusing Apple of anti-competitive practices after insisting that Apple allow it to run a competing app store on the iPhone and iPad.

While the Epic Games lawsuit has yet to produce any results — initial hearings aren’t even expected to begin until sometime this spring — it’s forced lawmakers to take a closer look at how Apple runs its app economy, and whether the iPhone maker is guilty of stifling competition by insisting that all apps be distributed through its single App Store, with its sometimes intransigent rules and of course the 15-30 percent commission that developers are required to pay for the privilege of distributing their apps in that manner.

While there are a number of reasons Apple’s App Store is good for consumers, not all developers agree that it’s good for their purposes, and there’s definitely been a groundswell of opposition following Epic’s move, with other developers such as Spotify, who have also long been vocal opponents of Apple’s policies, joining up in a new “Coalition for App Fairness” to push for changes in how Apple runs the App Store.

To be fair, not everybody who is part of this coalition is insisting that they be allowed to run their own app marketplaces; that’s definitely what Epic Games is after, but others simply want better deals from Apple in terms of the commission it takes, the services it offers, or simply more transparency in Apple’s App Store review policies, which can sometimes seem capricious at best.

North Dakota Enters the Fray

While the battle has already drawn the attention of regulators and lawmakers, with antitrust probes already ongoing in Europe and reports that the U.S. Department of Justice has been preparing to do the same, these are purely in the investigative stages, and have yet to even come up with any recommendations about what lawmakers should do, much less the tabling of actual bills that would call for a change in Apple’s approach.

However, it seems that at least one senator in North Dakota isn’t willing to wait for the Department of Justice to figure things out, and he’s taking the matter into his own hands with a new bill that would prohibit the App Store from forcing developers to use their stores and payment systems exclusively.

The new bill, Senate Bill 2333, isn’t just targeting Apple either, since the law it proposed would apply equally to the Google Play Store, which pretty much operates under the same rules. While Android users can install apps outside the Google Play Store, the process is definitely not as seamless as simply downloading an app from Google Play, which implies that developers are still basically forced into using Google’s store if they want to distribute apps for the Android platform.

As The Bismarck Tribune reports, the bill was introduced by State Senator Kyle Davison (R-Fargo), who said at a press conference that the intent is to create more opportunities for app developers while also protecting consumers.

The purpose of the bill is to level the playing field for app developers in North Dakota and protect customers from devastating, monopolistic fees imposed by big tech companies.

Kyle Davison, North Dakota State Senator

Davison adds that Apple and Google’s “monopolistic fees” result in smaller developers being penalized by forcing them to charge higher prices, while also “limiting choices for consumers.”

Several developers in North Dakota have expressed their support for the bill, saying that Apple and Google exercise so much control with their duopoly that it “really puts these businesses in a tough position.”

The Proposed Rules

The bill, which would of course only apply within the confines of North Dakota, lays out three restrictions for any “digital application distribution platform” that exceeds $10 million in annual revenue, which of course would naturally include the multi-billion-dollar App Store.

Under the terms of the bill, Apple would not be allowed to require any developer in North Dakota to “use a digital application distribution platform or digital transaction platform as the exclusive mode of distributing a digital product,” nor “use an in-application payment system as the exclusive mode of accepting payment from a user.”

Further, Apple would also be prohibited from retaliating in any way against a developer who chooses to distribute their apps on an alternative application store, or use an alternative payment system.

Apple’s Response

Naturally, Apple was less than impressed, with its Chief Privacy Engineer Erik Neuenschwander weighing in with a statement that the bill would “destroy iPhone as you know it,” since the changes it would require would “undermine the privacy, security, safety and performance that’s built into iPhone by design.”

Simply put, we work hard to keep bad apps out of the App Store; [this bill] could require us to let them in.

Erik Neuenschwander, Apple

What This All Means

If you think Neuenschwander’s comments sound a bit hyperbolic, you’d probably be right, and Basecamp co-founder David Heinemeier Hansson, who has long been one of the most vocal opponents of Apple’s App Store policies — and tech monopolies in general — also testified in favour of the bill and called out Apple for exaggerating the risks.

While Hansson called Neuenschwander’s comments “beyond over the top,” as always the truth is somewhere in the middle, of course. Certainly, there are numerous security features built into iOS that already protect users from malicious apps, which really have nothing to do with those apps being distributed through the App Store.

For example, the fact that an app has to ask for permission to use location services, or access your photos, or even let you opt-out of ad tracking are all security features that are enforced by iOS, and have nothing to do with the apps coming from the actual App Store.

While there presently aren’t any other legitimate ways for consumers to install apps, presumably Apple would be more than capable of opening this up in such a way that it wouldn’t compromise the existing iOS security or privacy features.

That said, however, this doesn’t mean that users wouldn’t still be subject to risks from scammers and other privacy-invasive apps. Even if users still have to grant permission to access things like location tracking, that doesn’t mean that every customer of an alternative app marketplace is going to be savvy enough to know whether they should allow this, and it’s not hard to imagine unscrupulous app developers trying to trick users into giving up more information than they should.

While Apple hasn’t always been successful at blocking scam apps on the App Store, the fact is that it does try to police the App Store, and when these types of apps appear, they’re usually taken down pretty quickly.

There’s also a smaller but not inconsiderable risk of malicious developers finding zero-day exploits and other unpatched security holes in iOS and attempting to take advantage of these through third-party app marketplaces where they’re more likely to go undetected. However, it’s also unclear how much Apple can prevent that sort of thing even on the App Store, and when it does find exploits, they’re usually patched at the iOS level anyway.

Multiple app marketplaces would also potentially lead to a risk of fragmentation, since companies like Epic Games would almost certainly try to set up lucrative deals to woo game developers onto their stores exclusively, resulting in users needing to install multiple “app stores” to get the apps that they want and keep them updated properly, not to mention the complexity of multiple payment systems and providers and different customer support policies.

Either way, at this point North Dakota is the only state that seems to be pushing for this kind of change so quickly, and since the rules would be confined to the borders of North Dakota, it’s really unclear exactly how this would even work. Presumably, Apple would in the very least have to set up a means of allowing alternative marketplaces for users and developers in North Dakota, but that doesn’t necessarily mean that it would have to make these available even to the rest of the U.S., much less worldwide.

Apple’s bigger fear is likely that once it opens that door to North Dakota, it wouldn’t be long before other jurisdictions followed suit and started demanding similar changes, and it’s possible that Apple might try to avoid the issue entirely simply by ceasing to do business in North Dakota entirely.

Since the company has no Apple retail stores in that state, which has a population of just over three-quarter million people, the loss for Apple would be far more political than economical — the revenue it would lose would be a drop in the bucket, but it would certainly stand to lose face if it chose to make that call.

At this point, however, the bill isn’t quite ready to be tabled in the state legislature anyway, with State Senate Committee Chairman Jerry Klein (R-Fessenden) stated that “there’s still some mulling to be done” before they can decide if they should even move the bill forward.

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