Tim Cook, Apple’s CEO, speaks at the Dreamforce 2019 conference in San Francisco on November 19, 2019.
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Some application vendors that rely on mobile distribution from Apple i Google they fear how much power the tech giants have over their business, a congressional testimony said Wednesday.
“We’re all scared,” Match Group chief legal officer Jared Sine said at Senate Amy Klobuchar, D-Minn., Chair of the Senate Judicial Antitrust Subcommittee.
The hearing brought together representatives of Apple and Google, including several of their harshest critics Match Group, which owns a Tinder dating site; Tile, which makes devices that help users find lost items and faces new competition Apple’s AirTag technologyand streaming music services Spotify.
The hearing comes as lawmakers on both sides of the aisle work to update antitrust laws that could better explain the power several technology giants have in many digital markets. This includes the ability of platforms such as Apple and Google to manage the main distribution platform for applications, while increasingly promoting their own competing products.
Throughout the hearing, app makers expressed fear about how easily any company could undercut their business by making small changes to their app store rules. They also complained about high in-app purchase fees and unclear implementation of standards.
Allegations of threats
Several CEOs have accused Apple and Google of threatening their business.
Sine said Google called Match Group on Tuesday night after his testimony went public and asked why his testimony differed from the company’s comments in their latest earnings call.
In a call for earnings, Match executives said they believe they are having productive talks about Google’s in-app payment fee of 30% through the Google Play Store. But in testimony, Match complained that Google had made “false pretenses that the platform was open” and complained about its “monopoly power”.
Wilson White, Google’s senior director of public policy and government relations, said it sounds like employees working on Google’s business development team are reaching out to ask an “honest question”. White said he doesn’t see it as a threat “and we would never threaten our partners,” because Google needs app developers to use its app store to be successful.
Senator Richard Blumenthal, D-Conn., Said the call was “potentially responsive.”
Senator Richard Blumenthal, D-CT, speaks during a Senate Justice Committee hearing on the Jan. 6 uprising at the Senate Hart Office building on Capitol Hill, Washington, DC, on March 2, 2021.
Graeme Jennings | Pool via Reuters
Klobuchar said she plans to further consider the issue.
Spotify CEO Horacio Gutierrez said he could come up with “at least four clear examples of threats and retaliation” from Apple after Spotify decided to talk about alleged anti-competitive behavior and Apple’s fees for developers on digital products purchased through its platform. That included threats of removing the Spotify app, refusing promotions, or months to approve minor app updates, he said.
“They basically threw the book at us to make it harder for us to continue to support our decision to plead,” he said.
Fees and rival products
Many app manufacturers have complained about the fees that gatekeepers charge for purchases in a digital service app.
Gutierrez complained about what he called Apple’s “gag order” because of how Spotify can communicate with its own users about how to upgrade to its paid version.
For example, Spotify allows customers to upgrade only outside of their iOS app to avoid Apple’s 15% to 30% commission for digital services purchased through its platform. But since Spotify doesn’t sell paid service through its iOS app, Apple also doesn’t allow app makers to discuss upgrades with customers through the app – instead, users have to upgrade through a web browser on their computer or some other method.
At the same time, Apple uses a competing service, Apple Music, which has no such restrictions. Gutierrez said this gives Apple’s version an unfair advantage.
Representatives from Apple and Google told lawmakers that their developer fees are designed to cover the costs that go into distributing apps through their platforms and their proper insurance. Apple’s chief compliance officer Kyle Andeer compared the services offered in the App Store today to the cumbersome and expensive processes that app makers had to strive to distribute their apps before the App Store existed.
White presented the group as a gathering of “small but loud” representatives of “primarily large companies”. He said he was concerned that in trying to address their grievances, “we are damaging the very foundation that has allowed Android’s open source ecosystem to work so well for a much larger set of SMEs.”
In addition to complaints about fees, the developers worried that Apple’s own rival products encouraged them to make unfavorable decisions about them.
For example, Kirsten Daru, chief tile adviser, said the company had asked Apple for permission to use ultra-wideband technology on iPhones to make its tracking technology more accurate than Bluetooth alone can use. She said Apple rejected the request and then reserved the technology for its competition AirTags, which she announced on Tuesday.
Although Apple is introducing a way for independent developers to link to more accurate location data, Daru said that in order to access them, “we need to give Apple unprecedented control over our business and direct customers to the Find My app to find their lost items.”
Apple’s Andeer claimed that AirTags is a separate product from Tile, which currently has the most market share in the space, and that tools to open more independent developers will boost competition.
Unclear standards
App makers have also complained that Apple’s application of the app store policy may seem arbitrary and delay the launch of key features. Apple can tell developers which rule they broke, but not exactly how or what to do to fix it, Sine said.
He said Tinder tried to send a version of its app with a feature that aims to protect its LGBTQ + users by notifying them when they are in a country where they could be at risk of exposing their sexuality or gender identity. Sine said it took two months and a conversation between the top executives of the Match Group owners, IACand Apple to solve the problem.
An exchange between ranked subcommittee member Mike Lee, R-Utah and Andeer revealed how complex Apple’s App Store rules can be.
U.S. Sen. Mike Lee, R-Utah speaks during a Senate Judicial Committee hearing on an FBI investigation into links between Donald Trump aides and Russian officials during the 2016 U.S. presidential election, on Capitol Hill in Washington, DC, November 10, 2020 .
Susan Walsh Reuters
Lee asked Andeer to differentiate between why a service paid through Tinder could cause a commission, and it wouldn’t for Uber. Andeer explained that the Uber user pays for a non-digital service – a car that will appear in their house – until they expect the same return from Tinder, saying that it would be a different service, in what seemed to be an insinuation of sex work.
Application manufacturers have emphasized that they rely on application stores because of their unprecedented approach to consumers. But, they argued, it’s not a symbiotic relationship that Apple and Google like to paint.
“We are not successful because of what Apple has done, we are successful despite Apple’s interference,” Gutierrez said. “And we would be much more successful if it weren’t for their anti-competitive behavior.”
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