The digital age has progressed in no small part because we have allowed the Internet and its applications to be pretty much a regulation-free playground.
The Open App Markets Act would place a heavy burden on one of America's most free and innovative industries.
A pps have transformed mobile phones into tools for commerce, information, and entertainment. But now, some government officials want to stifle this dynamic technology — and do so in ways that will empower scam artists and endanger everyday consumers.
From an industry that barely existed 15 years ago, today, more than 8.5 million apps exist, with most of them housed on platforms maintained by Apple and Google. Many of them are offered free of charge. But in today’s baffling policy environment, the two dominant companies that offer apps are targets for regulation, thanks to progressive antitrust crusaders, Senators Richard Blumenthal (D., Conn.) and Amy Klobuchar (D., Minn.). Shockingly, they’re getting help in this effort from otherwise dependable conservative Republican senators.
The chief complaint against the two companies is, in Klobuchar’s words, that they function as “gatekeepers.” She says they “control the app marketplace, wielding incredible power over which apps consumers can access. This raises serious competition concerns.” Remember: These are the companies that helped create this marketplace in the first place.
Klobuchar chides Apple and Google for charging a service fee on purchases made in the apps — such as a Fortnite gamer buying armor. But she ignores how this market works.
Rather than charging app developers for downloads of their apps, Apple and Google instead charge on the in-app transactions. These service fees cover the development, construction, advertising, improvement, and security required to build the devices Americans love to use. Some corporations like Netflix and Spotify won’t let you sign up through the app to avoid having to pay a penny to Apple or Google for all the free services they receive. These on-device fees are the same as those charged by Microsoft for the Xbox and by Nintendo for the Switch.
But it’s not mere happenstance that app developers have flocked to Google and Apple. They’ve done so because customers find real value in those app stores — knowing that the platforms are accessed by millions and millions of people. I’m not always a fan of Google and Apple pricing policies and certainly not their politics. I’m often not thrilled with what United Airlines charges for a plane ticket either, but that isn’t a call for Congress to set the prices.
Does Walmart have to place every T-shirt and book on their store shelves? Does Safeway have to carry every variety of cereal? Food companies don’t have a right to sue a grocery store for declining to sell their brand of ice cream. (Or at least, they certainly shouldn’t.)
Who else should decide on how apps are sold? Politicians? Federal regulators? Let’s not forget that the digital age has progressed in no small part because we have allowed the Internet and its applications to be pretty much a regulation-free playground.
Apple rigorously vets apps to ensure they don’t contain the kinds of malware that can harm or disable devices and compromise the user’s personal information. Similarly, Google conducts a safety check on every app in its app store before it is available for download. It provides what amounts to a Good Housekeeping seal of approval and a filtering system that promotes security and safety for consumers.
If there are programs or games or functions that quickly become popular with customers, Google and Apple and other social-network platforms have a strong incentive to carry and promote them, or they risk losing their customers to smaller and more nimble rivals.
But under Blumenthal and Klobuchar’s legislation, these platforms would be required to accept virtually anyone’s app — even if there is little or no demand for it. And even when Google or Apple have legitimate concerns about an app’s privacy or security features, they would be prohibited from citing these concerns “as a pretext to exclude” such apps.
In other words, any app developer — even if his or her product doesn’t pass the test for safety and security — can claim to have been unfairly excluded. Multitudes of app developers will have a private right of action to seek damages in court. This sounds like a dream come true for trial lawyers. But how it will help consumers who have no shortage of choices is a mystery.
The new regulations proposed would also establish a legal catch-22 for the platforms. If they deny access to an app, they can be sued for monopolistic behavior. If they allow all applications on their platforms, they can be sued for reckless disregard for the welfare of their customers by allowing malicious or malfunctioning apps.
Even a trade association for app-makers says that the bill “would outright prohibit many of the services our member companies have pushed the platforms to perform better — from removing copycat apps and malware to eliminating apps with fake / fraudulent reviews.”
Two fierce and well-funded competitors are the definition of competition, not monopoly. Let’s not forget these companies also now face fierce rivals in China and other nations that want to become the new Silicon Valley. If app producers are denied access to the major devices and platforms, that’s exactly the incentive for Apple and Google competitors to erode their market share. Look at how a multitude of new video networks are eating into Netflix’s market share.
This is an industry that ain’t broke, but progressive legislation like the Open App Markets Act will certainly break it.