Arizona House advances bill that would allow apps to bypass Apple, Google fees

An Arizona bill that would allow app developers to bypass fees from the Apple and Google stores advanced Wednesday in the state House. 

The bill, introduced by Republican state Rep. Regina Cobb passed in a tight 31-29 vote.

The bill would bar the app stores from requiring in-app payment as the only mode of accepting payment from users in Arizona to download apps or purchase products through an app. 

Google and Apple’s terms allow the companies to collect 15 to 30 percent of app revenue. If the bill were to pass in the Senate and be signed into law by Arizona Gov. Doug Ducey (R) it could greatly impact the tech giants’ ability to collect funds from in-app purchases and sales. 

Apple had pushed back on the bill, with the company’s chief compliance officer Kyle Andeer testifying at a state House hearing that the bill would serve as “a government mandate that Apple give away the App Store.”

“This bill tells Apple that it cannot use its own check-out lane (and collect a commission) in the store we built.  This would allow billion-dollar developers to take all of the App Store’s value for free—even if they’re selling digital goods, even if they’re making millions or even billions of dollars doing it,” Andeer said, according to a copy of the testimony Apple provided. 

Apple did not provide further comment in response to the bill passing in the House and a spokesperson for Google declined to comment on the legislation. 

The bill also faced some opposition from Arizona Democrats. 

“Arizona does not have an interest in this fight,” Democratic Arizona State Rep. Diego Rodriguez said, according to CNBC. “We don’t have a dog in this fight, what we need to do is be focused on policies that are protecting consumers. This bill does not protect consumers, it protects a $1 billion company from another billion-dollar company.”

Supporters of the bill included the Coalition for App Fairness, a group representing a number of startups and popular apps, as well as a coalition of progressive groups that touted the bill as a way to combat the market power of top tech companies. 

“The Coalition for App Fairness is pleased to see the House passage of #HB2005, which will encourage business innovation in Arizona and protect consumer choice. While this is cause for celebration, it is only a first step toward achieving a truly level playing field for all,” the coalition tweeted on Wednesday. 

The Coalition for App Fairness is pleased to see the House passage of #HB2005, which will encourage business innovation in Arizona and protect consumer choice. While this is cause for celebration, it is only a first step toward achieving a truly level playing field for all.

— Coalition for App Fairness (@appfairness) March 3, 2021

Pat Garofalo, director of state and local policy at the American Economic Liberties Project, said the passage of the bill in Arizona is “proof that there is a growing desire to rein in the power of the Big Tech companies that hold sway over key areas of commerce.”

“Small businesses exist at the whims of platform monopolies that can arbitrarily crush them overnight, with no warning or recourse, if they don’t agree to turn over a significant cut of their revenue in order to access their own customers. Bills such as HB 2005 are one part of addressing those harms,” Garofalo added in a statement. 

The American Economic Liberties Project was part of a coalition of progressive groups that  penned a letter last month to members of the Arizona legislature urging them to pass the bill. 

The letter was also signed by American Family Voices, Arizona Working Families Party, Fight for the Future, Progress Arizona, Public Citizen and Progressive Change Campaign Committee. 

“It’s long past time for lawmakers to rein in the power of Big Tech companies,” Fight for the Future executive director Sarah Roth-Gaudette said in a statement.

“We think it’s great that lawmakers at the local, state, and federal level are showing real interest in addressing the abuses that come with this incredible level of power over our digital lives,” Roth-Gaudette added. 

A similar bill to Arizona’s failed to pass in North Dakota’s state Senate last month. 

Arizona’s bill aimed at curbing Google and Apple’s ability to collect money from app purchases is just one way lawmakers across the country are looking to challenge the market power of the top tech companies in the U.S. 

In D.C., the House Judiciary antitrust subcommittee is undertaking a series of hearings on proposals to address what it sees as an abuse of online market power following the release of the panel’s antitrust report in October. The report accused Apple, Google, Facebook and Amazon of stifling competition.