US Moves to Regulate 'App Market Monopoly'... North Dakota State Wins Against Apple and Google

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Seulgina Jo] The bill to prohibit app market monopolies, which had been promoted in the state of North Dakota, USA, was ultimately rejected by the state senate. The bill directly targeted the Apple App Store and Google Play, which, based on their high market share, force their own payment systems (in-app payments) and take a hefty 30% toll. However, despite the rejection, similar bills are being promoted in states such as Georgia and Arizona, so antitrust regulatory movements targeting big tech companies in the US are expected to spread.

According to the economic media CNBC, on the 16th (local time), the North Dakota state senate voted on 'Bill 2333,' which regulates the Apple App Store and Google Play, and rejected it by 36 to 11. Bill 2333 contains provisions that prevent Apple and Google from forcing developers or app/content companies to list only on their own app markets. They also cannot force the use of in-app payment systems.

This is the first major bill at the state level in the US targeting the app market monopolies of Apple and Google. It is similar in content to the so-called 'Google Gapjil Prevention Act (Amendment to the Telecommunications Business Act)' being promoted domestically in Korea.

CNBC reported, "This vote is a victory for Apple, which has claimed that the App Store protects iPhone users from malware, fraud, and other threats," adding, "If the North Dakota state senate had passed the bill, related discussions would have continued and it would have been voted on in the House." The bill applies only to companies with annual sales of over $10 million in the US through app markets. This means it applies only to Apple and Google, the media added.

The vote attracted attention as a potential turning point that could break the app market monopolies maintained by Google and Apple since the advent of smartphones. Randy Burkhardt, a North Dakota state senator, pointed out, "Adam and Eve were not forced to eat the same fruit." On the other hand, Jerry Klein, a North Dakota state senator who opposed the bill, argued, "North Dakota is not the place to resolve disputes between companies about commission rates or payment systems."

In the US, the controversy over the 'app toll' has intensified since last year when Apple removed Epic Games from the App Store after Epic built a separate payment system in protest against Apple's commission policy. Epic Games immediately filed an antitrust lawsuit against Apple and Google in a US court after its app was removed. Additionally, the 'Coalition for App Fairness (CAF)' was formed to counter platform companies. The coalition includes the world's largest music streaming company Spotify and Match Group, the operator of the dating app Tinder. CAF is confirmed to have actively testified during the North Dakota bill discussions. CAF emphasized in a statement, "CAF wants to see changes in the App Store."

Apple did not comment separately on the North Dakota state senate vote result. Apple has strongly criticized Bill 2333, calling it a "bill that underestimates privacy leaks, security, and safety," and "a bill so threatening it would destroy the iPhone you know." In particular, Apple has argued that forcing in-app payments and a 30% toll is a user protection measure, asking, "Are you telling store owners to stock shelves with products lacking quality and stability?"

Although Bill 2333 did not pass the state senate, the movement in North Dakota, a relatively small state in the US, is expected to influence other states currently discussing similar legislation. Similar bills are being promoted in Georgia, Arizona, Massachusetts, Minnesota, and Wisconsin. The New York Times (NYT) reported, "Even if the bill does not pass, the war against Google and Apple will not end."

A report released last year by the US House Judiciary Committee's antitrust subcommittee included content stating that the monopoly power of Apple and Google in the app market brings enormous profits to these companies. Apple and Google are estimated to have earned $33 billion (approximately 36.26 trillion KRW) last year from app market commissions alone.