Bill aimed at Google, Apple app store profits fails again

A bill that sought to slash the profits Apple and Google make from their app stores was rejected by legislators Wednesday, the second year in a row the Big Tech firms have kept such legislation from advancing.

This year’s House Bill 2662 would have barred any application platform provider used by more than 1 million Arizonans from making their app store the exclusive place to get applications — and from forcing users to use their payment system.

“I am skeptical of government interference in the free market, but Big Tech has eliminated that competition in the free market,” Kingman Republican Rep. Regina Cobb, the bill’s sponsor, told the House Judiciary Committee. “This bill is déjà vu from last year, and I know a lot of you are getting pressure.”

Apple and Google have been waging a public war with major developers who have revolted against the app store policies. Apple booted the immensely popular video game Fortnite from its app store after the developer, Epic Games, bypassed Apple to let players purchase in-game virtual currency directly from the company. Google quickly followed suit.

Epic promptly filed multiple lawsuits against both companies. In the case against Apple, the court sided with Apple on nine out of the 10 counts in a mixed ruling last year declaring Apple was not a monopoly but that the company can’t block in-app purchase. 

One Apple software manager who spoke to the committee Wednesday said that HB2662 essentially asks lawmakers to take a side in the ongoing legal battle between the company and Epic Games. In the appeal of the case, the U.S. Department of Justice, Microsoft and the attorney generals of 35 states have submitted legal filings disputing the original ruling.

And the bill could jeopardize users — particularly children, as Apple’s app store includes parental controls on both content and in-app purchases, said Erik Neuenschwander, an Apple Software Manager.

“If this bill were to pass then app developers would choose different developers and parents wouldn’t know if they are receiving the same level of protection,” he said, adding that a handful of “wealthy companies” are helping fund Cobb’s legislation. 

Concern about injecting Arizona state law into an ongoing legal battle swayed lawmakers into opposing the bill.

“I don’t think we should be in the middle of this,” Rep. Domingo DeGrazia, D-Tucson, said. “There are a lot of considerations here that are beyond us, and we haven’t touched the cybersecurity and privacy side either.” 

Rep. Beverly Pingerelli, R-Peoria, echoed that and said the bill went too far. 

“I don’t think we should be in the middle of a contractual dispute,” she said. 

The legislation was killed on a 4-5 vote in the House Judiciary Committee.

Déjà vu

Last session, Cobb ran the same legislation and found herself the target of an army of lobbyists who descended upon the Arizona Capitol to kill the bill.  

Apple and Google lobbyists also killed a similar bill in Georgia. Lobbyists for Apple threatened to pull out of two important economic development projects, one of which is a $25 million investment in a Black college in Atlanta and a multibillion-dollar partnership with Kia to build autonomous vehicles in the city of West Point, according to Politico. 

A year ago, as Cobb was rallying support for the measure, lobbyists were sending letters to GOP lawmakers from the American Legislative Exchange Council, an organization that connects big businesses with Republican lawmakers to craft legislation, and anti-government activist Grover Norquist. The messages warned Cobb’s legislation was government overreach that would harm consumers. 

One lobbyist, Stuart Goodman, also sent a letter from the Electronic Transaction Association opposing similar legislation in North Dakota. Before the bill in North Dakota was shot down, Apple representatives held a closed-door meeting with the majority of the Senate committee hearing the bill without publishing an agenda, raising questions about open public meeting law in that state. 

Lobbyists for Apple in 2021 emailed Senate Commerce Committee Chairman J.D. Mesnard, R-Chandler, and called the previous version of the legislation “susceptible to legal challenges.” Over the next two weeks, outside groups would send letters to individual senators opposing the bill, according to records obtained by Tech  Transparency Project. 

The Senate Commerce Committee ended up tabling the bill on March 24, and it never received a hearing.