App Store Antitrust Legislation Introduced into U.S. Senate

The bipartisan bill, named the Open App Markets Act, seeks to set fair, clear and enforceable rules to protect competition and strengthen consumer protections within the app market.

U.S. Senators Richard Blumenthal (D-CT), Marsha Blackburn (R-TN), and Amy Klobuchar (D-MN) introduced the Open App Markets Act. The bill establishes rules related to the operation of an app store by a covered company (i.e., the owner or controller of an app store with more than 50 million U.S. users).

The bill prohibits a covered company from (1) requiring developers to use an in-app payment system owned or controlled by the company as a condition of distribution or accessibility, (2) requiring that pricing or conditions of sale be equal to or more favorable on its app store than another app store, or (3) taking punitive action against a developer for using or offering different pricing terms or conditions of sale through another in-app payment system or on another app store.

A covered company may not interfere with legitimate business communications between developers and users, use non-public business information from a third-party app to compete with the app, or unreasonably prefer or rank its own apps (or those of its business partners) over other apps.

The bill provides for enforcement of its provisions by the Federal Trade Commission and the Department of Justice, as well as through suits brought by developers that are injured by reason of anything prohibited by this bill.

Senator Blumenthal states: “This legislation will tear down coercive anticompetitive walls in the app economy, giving consumers more choices and smaller startup tech companies a fighting chance...I’m proud to partner with Senators Blackburn and Klobuchar in this breakthrough blow against Big Tech bullying. This bipartisan bill will help break these tech giants’ ironclad grip, open the app economy to new competitors, and give mobile users more control over their own devices.”

Mobile devices are central to consumers’ economic, social, and civic lives, and the mobile app market is a significant part of the digital economy. In 2020 alone, U.S. consumers spent nearly $33 billion in mobile app stores, downloading 13.4 billion apps.

According to numerous reports, including testimony provided in a Senate Judiciary Antitrust Subcommittee hearing held in April and chaired by Klobuchar, both Apple and Google have appeared to use their powerful gatekeeper control to stifle competition in the app store market. For example, Apple has prevented the creation of third-party app stores on iPhones, required that apps exclusively use their own expensive payment system, and penalized app developers for telling users about discounted offers. These strict terms close off avenues of competition and drive up prices for consumers. Startups also face serious challenges when Big Tech gatekeepers are able to prioritize their own apps to the disadvantage of others, make use of competitors’ confidential business information, and block developers from using features on a consumers’ phone.

The Open App Markets Act seeks to protect developers’ rights to tell consumers about lower prices and offer competitive pricing; protect sideloading of apps; open up competitive avenues for startup apps, third party app stores, and payment services; make it possible for developers to offer new experiences that take advantage of consumer device features; give consumers more control over their devices; prevent app stores from disadvantaging developers; and set safeguards to continue to protect privacy, security, and safety of consumers.

The Open App Markets Act has been endorsed by a number of technology and consumer groups, including the Internet Accountability Project, Public Citizen, Coalition for App Fairness, Color Of Change, News Media Alliance, Public Knowledge, Lincoln Network, Consumer Action for a Strong Economy (CASE), Digital Progress Institute, Electronic Frontier Foundation, American Principles Project, the American Economic Liberties Project and Consumer Reports.

“The targeted market rules proposed in this legislation will help create an app ecosystem that is fairer and more competitive, and will enable unfettered innovation by all companies – big and small – to the benefit of consumers,” said Sumit Sharma, Senior Researcher, Technology Competition at Consumer Reports.

Source: Congress.gov