Apple has had a history of charging app developers fees for the honor of having an app in the App Store. But several companies have now accused Apple of “anticompetitive” practices in a Senate subcommittee hearing.
The hearing, entitled “Antitrust Applied: Examining Competition in App Stores,” featured testimony from representatives of Spotify, Tile, and Match. The witnesses at the hearing levied several allegations, including that Apple undercut, and even copied, some of its competitors.
Horacio Gutierrez, the head of global affairs and chief legal officer for Spotify, testified that Apple required his company to use Apple’s in-app payment system for users. This system included Apple’s 30 percent fee. Gutierrez noted in his written testimony that the 30 percent fee “forced” the service to raise the price of its premium subscription service from $9.99 to $12.99.
He claimed that Apple “forced us to choose between two bad options: accepting Apple’s illegal tie of its proprietary payment system and paying Apple’s 30 percent tax, which would have forced us to raise consumer prices, and made our service more expensive than Apple Music, or accepting a gag order, prohibiting our communication with our own customers.” The gag order would have prohibited Spotify from telling users about its “premium service” and “discounts and promotions available to first-time subscribers.”
Kirsten Daru, the general counsel for Tile, testified to “anti-competitive practices on the Apple platform.” Daru suggested that Apple and Tile had a great relationship at the start, and Apple even “distributed [Tile’s] products in its stores beginning in 2015.” Then, Daru claimed, the relationship suddenly changed. Daru said that Tile was “summarily and without explanation kicked out of all physical Apple stores.” Soon, Daru stated further, “Apple hired away one of our star engineers.” On April 20, Apple introduced “their competing hardware product, AirTags,” according to Daru.
Finally, Jared Sine, chief legal officer for Match, told the subcommittee: “Apple’s and Google’s in app payment rules force users to hand over massive treasure troves of their most sensitive user data to Apple and Google, which these Tech Giants can use to enrich their own products, or develop their own competing digital services (nearly overnight) and charge 30 percent less than everyone else.”
Apple has held immense power in the online marketplace and has the power to change the rules at any time. The Arizona State House passed a bill to allow developers to circumvent app store fees, Minnesota is considering a similar legislation and. North Dakota considered legislation as well. North Dakota’s legislation ultimately failed.
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