App makers tell senators they’re scared of Apple and Google


A hearing by the subcommittee on competition policy, antitrust and consumer rights of the Senate Judiciary Committee yesterday found that some app makers are afraid Apple and Google. CNBC reports that some executives fear the power the two tech companies have over their businesses. Senator Amy Klobuchar (D-Minn.), Chair of the Senate’s Antitrust Subcommittee on Justice, told Match Group’s chief legal officer to Jared Sine, “We’re all scared.”

App companies explain why they huddle in front of Apple and Google

Representatives from Apple and Google appeared at the hearing along with employees from Match Group (owner of the dating app Tinder), Tile (whose item trackers compete with Apple’s new AirTag) and the music streamer Spotify, which is in strong competition with Apple Music. App makers have expressed concern about how a small rule change by Apple or Google could ruin their entire business. They also complained to lawmakers about the high in-app purchase fees (30%) that both Apple and Google charge.

The problem is not just the 30% that Apple and Google are charging (which ultimately increases the cost of apps for consumers), but also the rules the couple enforces that allow them to choose any business from the App Store who dares to challenge the tech giants by offering their own in-app payment platform. It did so with Epic Games, the developer of the popular Fortnite game, when it challenged Apple by charging a cheaper price on in-app currency for payments processed through Epic’s own system.

Some executives complained that Apple and Google threatened their businesses. Matchs Sine complained that Google threatened the company on the eve of the hearings by calling the company and asking why its testimony (which was released before the hearings) differed from the company’s comments during its last earnings call. During the call, Match made it sound like it was getting somewhere in conversations with Google, despite testifying during the hearings that Google had made “false open platform deceptions” and complained of its “monopoly power”.

Wilson White, senior director of public policy and government relations at Google, said this is not a threat and that Google would never threaten its partners because it needs developers to make the Play Store successful. Still, Senator Richard Blumenthal (D-Conn.) Said the call was “potentially actionable”. Senator Klobuchar said she would look into the matter further.

Apple was also accused of threatening behavior by Horacio Gutierrez, Spotify’s chief legal officer, of citing “at least four clear examples of threats and retaliation” from Apple. Spotify had talked about the so-called Apple Tax, and Gutierrez said Apple had threatened to remove the app, stop advertising and delay approving minor app updates. “They basically threw the book at us to make it difficult for us to maintain our decision to speak up,” he said.

Spotify’s chief legal officer said Apple had given Spotify a “gag order” preventing the company from discussing upgrades to the premium version of the music streamer through the app. This is because Spotify only allows upgrades outside of the app to avoid the 15% to 30% cut Apple gets on in-app payments. Anyone wishing to switch from Spotify’s ad-supported free service to the premium service must do so using a PC or desktop web browser.

What makes this very unfair from Spotify’s point of view is the fact that the latter has a competitive rival music streamer in Apple Music and doesn’t have the restrictions that Apple imposes on Spotify. This gives Apple a competitive advantage, says Gutierrez. Spotify’s chief legal officer says, “We are not successful because of what Apple has done. We have succeeded despite Apple’s interference. And we would have been much more successful without their anti-competitive behavior.”

Both Apple and Google say they need the 30% they charge for in-app purchases to cover the cost of distributing apps and making sure they’re safe. But is it really unfair that Apple doesn’t allow Tile to use the U1 chip that Apple developed for its own AirTag item tracker? The chip allows iPhone users to find lost items using a more precise method.

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