Gadgets & apps

This article was published on January 19, 2022

Monopoly in jeopardy: The two US bills that have Big Tech worried

Apple and Google have bashed these bills


Monopoly in jeopardy: The two US bills that have Big Tech worried
Ivan Mehta
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Ivan Mehta

Ivan covers Big Tech, India, policy, AI, security, platforms, and apps for TNW. That's one heck of a mixed bag. He likes to say "Bleh." Ivan covers Big Tech, India, policy, AI, security, platforms, and apps for TNW. That's one heck of a mixed bag. He likes to say "Bleh."

Update (January 21, 2022, 10:15 IST): Last night, The Senate committee voted 16-6 in favor of advancing the American Innovation and Choice Online Act. Senators have suggested more than 100 amendments to the bill, and antitrust subcommittee Chair Amy Klobuchar promised to keep working on it. 

With increased scrutiny from regulators around the globe these days, legal departments at the world’s biggest tech companies are likely working overtime on a daily basis. This week, the focus is on the US — home to Apple, Google, and Amazon — with two bills slated to be considered by the Senate Judiciary Committee.

These two proposals, the American Innovation and Choice Online Act and the Open App Markets Act, will focus on preferential treatment to indigenous products and the monopoly of app stores. In this story, we’ll break down both these bills and their impact on companies and consumers.

The American Innovation and Choice Online Act

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This bill was first introduced in the Senate last October with an aim to prevent companies from favoring their own products on their platforms.

It’ll primarily affect companies like Apple and Google as they place their own apps alongside third-party apps on their app stores, and in search results. It’ll also question Amazon, which sells private-label goods on its platform that compete with other sellers.

Amazon sells goods with its own label on the platform
Amazon sells goods with its own label on the platform

The act says companies should allow competing businesses the same access to features and operating systems as the platforms’ own apps. For example, Spotify should have the same access to system-level features as Apple Music on iOS, and YouTube Music on Android.

It notes platform owners should also let you remove their pre-installed apps from your devices. That means you should always have the option to remove Gmail from your Android phone, or Apple’s Mail app from your iPhone.

This way, consumers have more choice when looking for a product or service, and third-parties on a platform are on a more level playing field when it comes to becoming your preferred option for streaming music, searching the web, or shopping online.

The bill also prohibits these firms from taking advantage of non-public data to boost their own products, or making their own products more prominently visible in front of customers. In the past, Yelp and Tripadvisor have complained about Google boosting Maps over their products on Search.

Amazon has also been accused of toying with search results to give its own brands an advantage.

In 2020, firms like Epic Games, Spotify, Match Group (which owns Tinder, Match.com, OkCupid, and Hinge, among others), and Proton Mail teamed up to form a collation and protest against Google’s and Apple’s anti-competitive app store practices.

Coalition for App Fairness had some big name companies on board during its unveil
Coalition for App Fairness had some big-name companies on board during its formation

Last night, a group of companies, including Basecamp, DuckDuckGo, Genius, Quora, and Sonos, wrote a letter to the committee to support the bill.

You can read the full text of the bill here.

The Open App Markets Act

While the previous act focused on preferential treatment on all goods, this one focuses solely on mobile app store monopoly, i.e. Apple and Google’s domination on their respective platforms.

If you’re using an iPhone or an iPad, you have to download all your apps from the App Store. If you’re using an Android phone, you’re allowed to sideload apps or get them from other app stores on your device — but Google will show you a ton of security warnings when you do that.

That means it’s not easy for other companies to build a business around app stores to offer alternatives to these giants’ marketplaces — both of which take large cuts out of app developers’ revenue.

There’s also an argument about Apple and Google charging high fees from developers for in-app purchases. Many countries across the world have already forced these companies to allow third-party payment systems, so they don’t have to pay platforms between 15%-30% of their revenue for in-app purchases and subscriptions.

List of countries/regions where Apple and Google are facing anti-trust cases
List of countries/regions where Apple and Google are facing anti-trust cases

The bill proposes these companies lift the aforementioned restrictions on their platforms, and allow users to download third-party app stores — even set them as default sources. Plus, it wants platforms to clearly mark ads that promote their own apps.

The idea is that you should be able to download an app from any app store — not just Google’s or Apple’s. Plus, developers can offer discounts or different prices for digital goods on these alternative sources.

You can read the full text of the bill here.

Big tech’s defense

These bills have drawn similar responses from Apple and Google, and they both focus on maintaining user privacy. In a letter written to the Senate Justice Committee, the iPhone-maker said, “The bills put consumers in harm’s way because of the real risk of privacy and security breaches.”

It bashes these bills by saying they will give more power to bad actors:

If Congress responds by making it much harder to protect the privacy and security of Americans’ personal devices. Unfortunately, that is what these bills would do.

These bills will reward those who have been irresponsible with users’ data and empower bad actors who would target consumers with malware, ransomware, and scams.

The firm has vehemently discouraged sideloading to avoid security incidents. It even published a whitepaper to highlight how App Store protections keep users safe against malware and phishing campaigns.

Google also published a long blog post listing several negative consequences of these bills, such as harming US technological leadership, and disregarding user privacy. It tried to deflect the topic of discussion by saying regulators should focus on issues like privacy, and children’s safety:

There are important discussions taking place about the rules of the road for the modern economy. We believe that updating technology regulations in areas like privacy, AI, and protections for kids and families could provide real benefits. But breaking our products wouldn’t address any of these issues.

Both companies have tried hard to make the future look like doomsday if these bills are passed. However, there’s some hyperbole in their communication, and critics are not holding back to point that out.

Apple and Google are not the only companies under the antitrust scanner in the US. Meta is facing numerous investigations, including the latest US bill aimed at banning targeted online ads. Microsoft might also come under the radar with its Activision Blizzard acquisition. It feels like the beginning of a new antitrust season.

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