Google and Apple scare us, app makers tell Congress

Tim Cook, Apple’s CEO, speaks at the 2019 Dreamforce conference in San Francisco on Nov. 19, 2019.

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Some app makers who rely on mobile distribution from Apple and Google fear how much power the tech giants have over their businesses, according to congressional testimonials delivered Wednesday.

“We’re all scared,” Jared Sine, Match Group chief legal officer, told Senator Amy Klobuchar, D-Minn., The chair of the Senate Judicial Subcommittee on Antitrust at a hearing Wednesday.

The hearing brought Apple representatives together with Google and some of their most outspoken critics, including Match Group, owner of dating site Tinder; Tile, which creates devices that help users find lost items and faces new competition from Apple’s AirTag technology; and streaming music service Spotify.

The hearing comes as lawmakers on both sides of the aisle are working on updates to the antitrust laws that could better explain the power that a few tech giants have in many digital markets. That includes the ability of platforms such as Apple and Google to manage the main app distribution platform while increasingly defrauding their own competitors.

During the hearing, the app makers expressed fear about how easily both companies could undermine their business by making minor changes to their app store rules. They also complained of high fees for in-app purchases and unclear enforcement of standards.

Allegations of threats

Multiple executives accused Apple and Google of threatening their business.

Sine said Google called Match Group Tuesday night after its testimony went public to ask why its testimony differed from the company’s comments in their latest earnings call.

During the earnings call, Match executives had said they thought they were having productive conversations about Google’s 30% in-app payment fee through the Google Play Store. But in testimony, Match complained that Google had made “false pretenses of an open platform” and complained of its “monopolistic power.”

Wilson White, Senior Director of Public Policy and Government Relations, said it sounded like employees of Google’s business development team were reaching out to ask an “ honest question. ” Wilson said he didn’t see it as a threat “and we would never threaten our partners” because Google needs app developers to use its app store to be successful.

Senator Richard Blumenthal, D-Conn., Said the call was “potentially actionable.”

Senator Richard Blumenthal, D-CT, speaks at a Senate Judiciary Committee hearing on the Jan. 6 uprising at the Hart Senate Office Building on Capitol Hill in Washington, DC, March 2, 2021.

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Klobuchar said she intended to investigate the matter further.

Horacio Gutierrez, Spotify’s Chief Legal Officer, said he could come up with “at least four clear examples of threats and retaliation” from Apple after Spotify decided to speak out on alleged anti-competitive behavior and Apple’s fees for developers of digital products that purchased through its platform. That included threats to remove the app from Spotify, refuse to promote it, or wait months for minor app updates to be approved, he claimed.

“They basically threw the book at us to make it difficult for us to continue to support our decision to speak,” he said.

Fees and Competitive Products

Many app makers have complained about the fees that gatekeepers charge for in-app purchases for digital services.

Gutierrez complained about what he called Apple’s “gag order” about how it can communicate with its own users about how to upgrade to the paid version.

For example, with Spotify, customers can only upgrade outside of the iOS app to avoid Apple’s 15% to 30% commission for digital services purchased through its platform. But since Spotify doesn’t sell the paid service through its iOS app, Apple also doesn’t let the app maker talk about upgrades with customers through the app – instead, users have to upgrade through a web browser on a PC or some other method. .

At the same time, Apple operates a competing service, Apple Music, which has no such restrictions. Gutierrez claimed this gives Apple’s version an unfair advantage.

Representatives from Apple and Google both told lawmakers that their developer fees are intended to cover the costs associated with distributing apps through their platforms and properly securing them. Apple Chief Compliance Officer Kyle Andeer compared the services offered in the App Store today to the cumbersome and expensive process app makers had to pursue to distribute their apps before the App Store existed.

White cast the group as a set of ‘small but vocal’ voices from ‘mostly large companies’. He said he was concerned that “we are damaging the foundation that has allowed Android’s open source ecosystem to work so well for a much larger group of small and medium businesses.”

In addition to compensation complaints, developers were concerned that Apple’s own competing products might lead them to make unfavorable decisions against them.

Kirsten Daru, Tile’s General Counsel, said the company had asked Apple for permission to use ultra-wideband (UWB) technology on iPhones to make asset tracking technology more accurate than Bluetooth alone. She said Apple declined the request and then reserved the technology for its own rival AirTags, which it announced Tuesday.

While Apple is rolling out a way for third-party developers to build on the more accurate location data, Daru said we need to give Apple unprecedented control over our business and send customers to the Find My app to access it. find their lost items. “

Andeer argued that AirTags is a separate product from Tile, which currently has the bulk of the market share for the space, and that opening tools to more third-party developers will encourage competition.

Unclear standards

App makers also complained that Apple’s enforcement of the app store rules may seem arbitrary and delay the launch of important features. Apple can tell developers which rule they broke, but not exactly how or what to do to fix it, Sine said.

He said Tinder had attempted to submit a version of its app with a feature intended to protect its LGBTQ + users by notifying them when they were in a country where they would be at risk of their sexuality or expose gender identity. Sine said it took two months and a meeting between top executives from Match Group’s owner IAC and Apple to resolve the issue.

An exchange between subcommittee rankings member Mike Lee, R-Utah, and Andeer revealed just how complicated Apple’s App Store rules can be.

US Senator Mike Lee, R-Utah speaks at a hearing of the Senate Judiciary Committee on the FBI investigation into ties between Donald Trump employees and Russian officials during the 2016 US presidential election, on Capitol Hill in Washington, US , November 10, 2020.

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Lee asked Andeer to differentiate between why a paid service through Tinder might earn a commission and one for Uber wouldn’t. Andeer explained that an Uber customer pays for a non-digital service – a car that comes to their house – when they don’t expect the same return from Tinder, saying that would be a different service, in what appeared to be an innuendo. . of sex work.

The app makers stressed their reliance on the app stores for their unprecedented access to consumers. But, they argued, it’s not the symbiotic relationship that Apple and Google like to paint.

“We have not been successful because of what Apple has done, we have been successful despite the intervention of Apple,” said Gutierrez. “And we would have been much more successful without their anti-competitive behavior.”

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