App makers blow Apple and Google in Senate hearing on app store policy

The sometimes tense showdown highlighted how Apple’s antitrust control is growing after more than a year of similar focus on its peers like Amazon, Facebook and Google. And lawmakers were clear that the hearing would serve as a springboard for legislation to keep major technology platforms in check.

Much of the hearing focused on Apple’s treatment of app makers, largely because of Apple’s closed ecosystem that prohibits the installation of iOS apps from anywhere except the Apple App Store.

This week, Apple introduced a new product known as the AirTag, a small device that can be used to track down missing items. Tile, which is a competing product, accused Apple of giving AirTag an unfair advantage to the home court by not allowing Tile devices to use the same advanced, ultra-wideband frequencies to communicate with iPhones that use AirTag.

Kyle Andeer, Apple’s Chief Compliance Officer, testified that AirTag is a “very different product” and that the company is excited to compete in that market.

The criticism of Apple only increased from that moment on. Others witnessed Apple’s practice of charging digital goods and services providers a 30% commission on in-app transactions. Apple has argued that the fees ensure that the iOS ecosystem is safe and reliable for users.

Jared Sine, chief legal officer of Match Group – which owns Tinder – said the app store cost is now the company’s biggest expense, worth more than $ 500 million a year. (For example, if a user purchases a premium subscription through Tinder’s iOS app, 30% goes to Apple.)

“That’s $ 500 million that could go back into the pockets of everyday consumers or be used to hire employees or invest in new innovations,” Sine said.

Companies trying to find alternatives to Apple’s in-app payment system – for example, by urging users to pay directly on an app’s website – are quickly on Apple’s bad side, said Horacio Gutierrez, the chief legal. Spotify officer.

“We couldn’t even email our users to tell them about a way to upgrade” that didn’t require payment through Apple, “said Gutierrez, calling Apple’s contractual restrictions a kind of” gag order. “

App developers who cross the tech giants fear retaliation, the app makers said. Sine testified that Google contacted Match Group on the eve of the hearing requesting an explanation of the upcoming testimony.

Senator Richard Blumenthal called Apple’s and Google’s behavior “ blatantly indefensible, ” and upon hearing Sine’s testimony, subcommittee chairperson Amy Klobuchar told Senator Amy Klobuchar that he believes Google’s appeal was a case of harassment committed by the senate should be investigated.

“That’s the plan,” Klobuchar replied.

Wilson White, a senior director of public policy at Google, testified that he disagreed with Sine’s characterization of the call.

“I respectfully don’t see that as a threat, and we would never threaten our partners,” he said.

Apple later responded to Spotify’s allegations of unfair retaliation – such as claims that Spotify was denied promotion placement on the app store over criticisms of Apple – by citing Spotify’s immense business success.

“We’ve supported these companies,” Andeer said. “There is no evidence of retaliation.”

Andeer also defended Apple’s 30% commission structure, saying the company chose to apply the fees to digital goods and services from the start and most app developers pay nothing at all.

“We now have a marketplace with 1.7 million apps,” he said. “Eighty-four percent of them pay nothing.”

But Senator Mike Lee, the leading panel member, challenged Apple to explain why some services, such as Uber, were excluded from the commission requirement while online dating apps like Tinder were still subject to it.

Apple struggled to convince Lee of the distinction, arguing that Uber is not providing a digital good or service as it involves consumers calling a driver for physical transportation. In contrast, in online dating or ebook purchases, Andeer said, “all the experience resides in the four corners of the device.”

That still didn’t make sense to Lee or Sine, who claimed that app store operators like Apple and Google “have essentially used the Internet and moved it to the app stores.”

“They’ve set up their gateways, they’ve set up their toll booths; you have to pay the toll if you’re a digital good and a digital service,” Sine said. “They give everyone access to the highway, and what we say is, why isn’t the highway the same for everyone?”