Tim Cook, Apple CEO, speaks at the 2019 Dreamforce Conference in San Francisco on November 19, 2019.
David Paul Morris | Bloomberg | Getty Images
Some app makers who rely on Apple and Google’s mobile distribution are scared of how much power the tech giants have over their businesses, Congress announced on Wednesday.
“We’re all scared,” Match Group’s chief legal officer Jared Sine told Senator Amy Klobuchar, D-Minn., Chairman of the Senate Antitrust Subcommittee on Wednesday, at a hearing.
The hearing brought Apple representatives together with Google and some of their most outspoken critics, including Match Group, which owns dating site Tinder; Tile, which is used to make devices that allow users to find lost items and that faces new competition from Apple’s AirTag technology. and streaming music service Spotify.
The hearing is happening as lawmakers on both sides of the aisle work on updates to antitrust laws that could better explain the power of some tech giants over many digital markets. That includes the ability of platforms like Apple and Google to manage the main distribution platform for apps while haggling over their own competitors.
During the hearing, app makers expressed concern about how easily both companies could undercut their businesses by making small changes to their app store rules. They also complained about high fees for in-app purchases and the unclear enforcement of standards.
Allegations of threats
Several executives accused Apple and Google of threatening their businesses.
Sine said Google called Match Group Tuesday night after its testimonial was released to ask why its testimony was different from the company’s comments on its latest earnings call.
In the earnings forecast, Match executives said they had productive conversations about Google’s 30% in-app payment fee through the Google Play Store. As a testimony, however, Match complained that Google had made “false open platform deceptions” and complained about its “monopoly power”.
Wilson White, Google’s senior director of public policy and government relations, said it sounded like people on Google’s business development team asked an “honest question”. Wilson said he doesn’t see it as a threat, “and we would never threaten our partners,” as Google needs app developers to use its app store in order for it to be successful.
Senator Richard Blumenthal, D-Conn., Said the call was “potentially actionable”.
Senator Richard Blumenthal, D-CT, speaks during a Senate Judiciary Committee hearing on the January 6 riot at the Hart Senate office building on Capitol Hill in Washington, DC on March 2, 2021.
Graeme Jennings | Pool via Reuters
Klobuchar said she plans to investigate further.
Horacio Gutierrez, Spotify’s chief legal officer, said he could envision “at least four clear examples of threats and retaliation” from Apple after Spotify decided to talk about alleged anti-competitive behavior and Apple’s fees for digital product developers over his platform were bought. These included threats to remove the app from Spotify, refusing to promote it, or waiting months for minor app updates to be approved, he claimed.
“They basically threw the book at us to make it difficult for us to uphold our choice to speak up,” he said.
Fees and Competitive Products
Many app makers have complained about the fees gatekeepers charge for in-app purchases for digital services.
Gutierrez complained about Apple’s “gag order” about how it can communicate with its own users about how to upgrade to its paid version.
For example, Spotify allows customers to only upgrade outside of their iOS app to avoid Apple’s 15% to 30% commission fee for digital services purchased through the platform. However, since Spotify doesn’t sell the paid service through its iOS app, Apple won’t let the app maker talk to customers about the app about upgrades. Instead, users must upgrade through a web browser on a PC or other method.
At the same time, Apple operates a competing service, Apple Music, for which there are no such restrictions. Gutierrez claimed this gave Apple’s version an unfair advantage.
Representatives from Apple and Google told lawmakers that their developer fees should cover the costs of distributing apps across their platforms and securing them appropriately. Kyle Andeer, Apple’s Chief Compliance Officer, compared the services offered in the App Store today to the cumbersome and expensive processes that app makers had to follow to sell their apps before the App Store existed.
White cast the group as a series of “small but vocal” voices from “mostly large corporations”. He said he was concerned that in trying to address their grievances, we are “damaging the very foundation that enabled Android’s open source ecosystem to do so well for a much larger group of small and medium-sized businesses function.”
In addition to complaints about fees, the developers feared that Apple’s own competing products were incentives for making unfavorable decisions about them.
For example, Kirsten Daru, General Counsel of Tile, said the company asked Apple for permission to use ultra-broadband technology (UWB) on iPhones to make item tracking technology more precise than only possible with Bluetooth is. She said Apple declined the request, then reserved the technology for its own competitive AirTags, announced Tuesday.
While Apple is introducing a way for third-party developers to build on the more accurate location data, Daru said that in other cases we find “unprecedented control over our business and need to point customers to the Find My app to access it” their lost items. “
Andeer argued that AirTags is a separate product from Tile that currently has the largest market share for the space, and that opening tools to more third-party developers will encourage competition.
App makers also complained that Apple’s enforcement of the App Store rules could seem arbitrary and delay the launch of key features. Apple can tell developers what rule they broke, but not exactly how or what to do to fix the problem, Sine said.
He said Tinder tried to submit a version of its app with a feature that aims to protect LGBTQ + users by notifying them if they are in a country that is at risk of theirs Disclose sexuality or gender identity. Sine said it took two months and a conversation between top executives at Match Group owner IAC and Apple to resolve the issue.
An exchange between the ranking member of the subcommittee, Mike Lee, R-Utah, and Andeer showed how complex Apple’s App Store rules can be.
U.S. Senator Mike Lee, R-Utah, speaks during a Senate Justice Committee hearing into the FBI investigation into the links between Donald Trump employees and Russian officials during the 2016 U.S. presidential election on Capitol Hill in Washington, United States, Jan. November 2020.
Susan Walsh | Reuters
Lee asked Andeer to distinguish why a paid service through Tinder might be commissioned while Uber might not. Andeer explained that an Uber customer is paying for a non-digital service – a car that comes to their house – while not expecting the same return on investment from Tinder, saying this was a different service, which seemed a hint Sex work.
The app makers emphasized their trust in the app stores because of their unprecedented access to consumers. However, they argued that it’s not the symbiotic relationship that Apple and Google love to paint.
“We are not successful because of what Apple has done. We have succeeded despite Apple’s interference,” Gutierrez said. “And without their anti-competitive behavior, we would have been much more successful.”
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