As a congress continues his interrogation monopoly practices of technology companies, states come into the game. Among the first targets on their list are Apple and Google, which together represent 100% of the market for operating systems for smartphones. New bills introduced in several states would threaten corporate dominance and represent an opportunity for heads of state to put fairness in trade at the center of governance.
All apps downloaded by iPhone users go through Apple’s App Store because Apple doesn’t allow alternative markets. Google uses its own store, called Google Play and preinstalled on most Android phones, to give preference to own applications on similar applications from competitors. Although Google allows alternative app stores, users must download them.
The two companies keep up to 30% of the money consumers pay for both the apps and the purchases they make in those apps. (Credit card networks typically charge around 3% transaction fees.) Apple earned $ 72 billion last year from App Store fees alone, while Google Play brought in $ 39 billion to Google, according to a research company called Sensor Tower. This week Google said it would reduce his commission for certain App Store sales. Both companies are US targets and European monopoly surveys in the technology market.
Last fall, Epic Games, the creator of the popular Fortnite video game, sued Apple after trying unsuccessfully to wrest control consumer payments by adding its own direct payment system to Fortnite. Apple responded by removing the game from its App Store and a trial is expected to begin in May.
And now, states are tackling the issue of payments for mobile phone software. Recent bills introduced in more than half a dozen states, including Arizona, New York, Illinois and Georgia, would prevent Apple and Google from forcing developers to use platform payment systems. Some of the bills were backed by the Coalition for App Fairness, a nonprofit that opposes app store fees and was founded by tech companies like Epic Games and Spotify. With these bills, state lawmakers are directly challenging the market power of big tech, attempting to resolve through policies what could take years to achieve in antitrust cases.
Arizona House of Representatives This Month passed a bill that prevents digital platform providers from irresistible consumers and state-based software developers to use the payment systems of these platforms. The measure was supported almost entirely by Republicans. Most of the state’s Democrats have sided with Apple and libertarians with Americans for Prosperity and the Goldwater Institute opposing the bill, arguing that the state should not be involved in disputes between private companies and that federal authorities, not states, should regulate technology markets.
This libertarianism is at odds with the history of states using their powers to regulate trade and protect markets from corruption and monopolies. After all, states are already using their powers to regulate markets for public services, establish liquor boards, oversee pharmaceutical distribution, and provide oversight. other industries. Local regulation of corporate power predates the U.S. Constitution – the Colony of Massachusetts capped the interest lenders could charge on loans in 1641 – and for centuries heads of state have upheld the tradition, defying monopolies with regulations that kept local commerce open and vibrant.
States have antitrust laws because they have an interest in ensuring that their local businesses, workers, and consumers are not vetted by big business. Far from being an intrusion into business affairs or a usurpation of federal power, these bills allow local businesses to avoid private gatekeepers. With these bills, policymakers are providing local businesses with what they need: access to open markets.
These bills also create opportunities for economic growth, as they could help states persuade tech companies to move within their borders without resorting to the usual failed tactics to offer grants. States spend about $ 40 billion a year – and that’s on the lower end of the estimate scale – trying to get businesses to relocate. When Amazon was shopping for a house for its second seat, states weren’t accused of meddling unnecessarily in the affairs of private business by trying to lure the business in with lavish grants. Likewise, we don’t hear any protests when states and cities give tax breaks to tech companies. According to Good Jobs First, a research organization that tracks corporate grants, Apple and Google have each received more than $ 200 million in state and local grants since 2015.
The idea that these measures could encourage companies to relocate is not theoretical. David Heinemeier Hansson, co-founder of Basecamp, a Chicago software company that has fought with apple on its payment system, the company said wishes to move its operations to a state with such a law on the books.
This is an opportunity for states not to spend money to accomplish something they have been trying to do for decades using precious public resources: creating new high-tech jobs and supporting innovative small businesses. helping them to escape the onerous conditions imposed on them. them by Apple and Google. Turns out the secret sauce for economic growth is what state leaders have been doing for hundreds of years – putting fairness, not monopolies, at the center of the process. legislative.
Matt Stoller (@matthewstoller) is Research Director at the American Economic Liberties Project and author of “Goliath: The 100-Year War Between Monopoly Power and Democracy”. Pat Garofalo (@pat_garofalo) is Director of State and Local Policy at the American Economic Liberties Project and author of “The Billionaire Boondoggle: How Our Politicians Let Corporations and Bigwigs Steal Our Money and Jobs”.