New North Dakota bill would force Apple to allow app stores and alternative payment systems

A new bill introduced in the North Dakota Senate could have significant consequences for app store operators. The bill, Senate Bill 2333, seeks to ban stores like Apple’s App Store and Google Play Store from requiring developers to use only those app stores and their integrated payment systems. respective. It also prohibits retaliation against developers if they choose another distribution channel or payment system.

“The purpose of the bill is to level the playing field for app developers in North Dakota and to protect customers from the devastating and monopolistic fees imposed by big tech companies,” said Senator Kyle Davison (R-Fargo), who introduced the bill before a Senate committee on Tuesday, told reporters at a press conference yesterday, as reported The Bismarck Tribune. Davison said the 30% fee imposed on application developers who sell software through the Apple and Google markets has the effect “of raising prices and limiting choices for consumers.”

The bill is fairly straightforward and establishes three key restrictions on any “digital app distribution platform” that exceeds $ 10 million in annual revenue. This means that an app store cannot:

1. “Require a developer to use a digital application distribution platform or a digital transaction platform as the exclusive mode of distributing a digital product.” That would likely mean that companies like Apple would have to allow app purchases outside of a single locked store.
2. “Require a developer to use an integrated payment system as the exclusive method of accepting payment from a user to download a software application or purchase a digital or physical product through a software application.” This would allow an iOS version of Fortnite, for example, to process integrated payments through Epic instead of Apple’s system.
3. “Crack down on a developer who has chosen to use a different app store or an integrated payment system.”

As a state bill, the bill would only affect the operation of businesses such as the App Store in North Dakota. But the sweeping changes called for by the bill would likely force companies like Apple to make substantial platform-level changes that could affect software distribution nationwide.

The use of in-app alternative payment methods is at the heart of an ongoing legal battle between Provided developer Epic Games and Apple and Google, after Fortnite was pulled from the App Store and Play Store in August last year for introducing its own payment processing tool.

Epic deliberately designed its Fortnite update to bypass the 30% discount on all in-app purchases required by Apple and Google as a protest, both for the standard 30% discount and in particular the Apple App Store rules which prohibit iPhone third-party application stores. (Google allows Android users to download third-party software and developers to create alternative app stores for software distribution, although this makes that difficult.) Epic is now suing both companies for alleged violations of the law. antitrust.

The Epic case is just one part of a growing antitrust movement in the United States that targets Big Tech. Each of the major U.S. tech companies, except Microsoft, is currently under increased antitrust review by the U.S. Department of Justice and Federal Trade Commission, as well as state attorneys general, with different levels of ongoing investigations. Although Apple is not the subject of an official investigation, CEO Tim Cook testified last summer before the Senate Judiciary Committee during its technology antitrust hearing. Meanwhile, the European Commission is conducting two ongoing antitrust investigations into the Apple App Store and Apple Pay.

Apple has previously testified against North Dakota’s new bill during a hearing Tuesday with the North Dakota Senate Committee on Industry, Business and Labor. Apple’s Erik Neuenschwander, its chief privacy engineer, told the committee that the bill “threatens to destroy the iPhone as you know it” and that it “would undermine privacy, security , to the safety and performance built into the iPhone by design ”, according to the Bismarck Tribune. “Simply put, we are working hard to keep bad apps out of the App Store; (the bill) might require us to let them in. ”

Basecamp co-founder David Heinemeier Hansson, who attended the hearing and testified in favor of the bill, criticized Apple for exaggerating the threat the bill poses to its business.

Hansson has become a vocal critic of Apple’s App Store policies, following a confrontation between his company and Apple last summer over Basecamp’s Hey email client. The disagreement centered on the functions of the Hey iOS messaging app, and Hansson and Basecamp CEO Jason Fried complained that the situation was emblematic of the inconsistently enforced rules by Apple and efforts by the company. company to ensure developers do not circumvent the 30% reduction mandate. Although Apple and Basecamp have reached a compromise, Hansson has since called for congressional action, as well as tighter antitrust regulation, to try to force Apple to change its policies and reign in Big Tech in its together.

In written testimony that Hansson prepared before the hearing, he presented his case for Senate Bill 2333. “After the recitals, the 17 lines of SB 2333 read like music. Written in a language I can understand without hiring a lawyer to analyze it for me. It almost sounds too good to be true! But I sincerely hope that’s not the case, ”he wrote in his testimony, which he later posted online. “May you listen to small software developers across the country, tired of being intimidated and shaken by a handful of big tech monopolies in Seattle and Silicon Valley.”

Hansson says the United States needs a “fair digital marketplace free from monopoly abuse” and that “no change will have a greater impact than giving small software companies like us a choice. integrated payment systems and protection against retaliation, if we refuse the onerous deal offered by the monopolies.

The chairman, Senator Jerry Klein (R-Fessenden), said during the committee hearing that “there are still some thoughts to be done” and that no action would be taken on the bill at this time. Neither Apple nor Google immediately responded to requests for comment for this story.