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Google and Apple scare us, app makers tell Congress

Apple CEO Tim Cook speaks at the Dreamforce 2019 conference in San Francisco on November 19, 2019.

David Paul Morris | Bloomberg | Getty Images

Some app makers who rely on mobile distribution of Apple and Google fear the power of tech giants over their businesses, according to congressional testimony on Wednesday.

“We’re all scared,” Match Group chief legal officer Jared Sine told Senator Amy Klobuchar, D-Minn., Chair of the Senate Judiciary Subcommittee on Antitrust in a hearing Wednesday.

The hearing brought together representatives from Apple with Google and several of their most vocal critics, including Match group, who owns the dating site Tinder; Tile, which makes devices that help users find lost items and faces new competition Apple AirTag technology; and music streaming service Spotify.

The hearing comes as lawmakers on both sides of the aisle work on updates to antitrust laws that could better explain the power a few tech giants wield in many digital markets. This includes the ability of platforms like Apple and Google to manage the primary application distribution platform while increasingly peddling their own competitors.

Throughout the hearing, app makers expressed concern about how easily either company could undermine their business by making small changes to their app store rules. They also complained about the high fees for in-app purchases and the unclear enforcement of standards.

Threat allegations

Several executives accused Apple and Google of threatening their businesses.

Sine said Google called Match Group on Tuesday night after his testimony became public to ask why his testimony differed from the company’s comments in their latest earnings call.

During the earnings call, Match executives said they believed they were having productive conversations about the 30% payment fee in Google’s app through its Google Play Store. But in his testimony, Match complained that Google had made “false pretenses for an open platform” and complained about its “monopoly power”.

Wilson White, senior director of public policy and government relations at Google, said employees of Google’s business development team came to him with an “honest question.” Wilson said he didn’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 exploitable”.

Senator Richard Blumenthal, D-CT, speaks during a Senate Judiciary Committee hearing on the January 6 insurgency, in the Hart Senate Office building on Capitol Hill in Washington, DC on March 2, 2021 .

Graeme Jennings | Pool via Reuters

Klobuchar said she plans to investigate the matter in more detail.

Spotify chief legal officer Horacio Gutierrez said he could think of “at least four clear examples of threats and retaliation” from Apple after Spotify decided to expose alleged anti-competitive behavior and Apple’s charges for developers on digital products purchased through its platform. This included threats to remove the Spotify app, refuse to promote it, or wait months for minor updates to the app to be approved, he said.

“They basically threw the book at us in order to prevent us from continuing to support our decision to speak up,” he said.

Fees and competing products

Many app makers have complained about fees charged by controllers for in-app purchases of digital services.

Gutierrez complained about what he called Apple’s “gag order” on how he can communicate with his own users on how to upgrade to its paid version.

For example, Spotify allows customers to upgrade only outside of its iOS app to avoid Apple’s 15% to 30% commission fees on digital services purchased through its platform. But since Spotify doesn’t sell the paid service through its iOS app, neither does Apple let the app creator talk about upgrades with customers through the app – instead, users have to upgrade. via a web browser on a PC or other method. .

At the same time, Apple operates a competing service, Apple Music, which has no such restrictions. Gutierrez claimed that this gives Apple’s version an unfair advantage.

Representatives from Apple and Google both told lawmakers that their developer fees were intended to cover the costs of distributing apps through their platforms and securing them appropriately. Apple Chief Compliance Officer Kyle Andeer compared the services offered on the App Store today to the tedious and expensive processes app makers had to go through to distribute their apps before the App Store did. exist.

White introduced the group as a collection of “small but vocal” voices from “big business mostly”. He said he was concerned that in trying to satisfy their complaints, “we are damaging the very foundation that has made the Android open source ecosystem work so well for a much larger set of small and medium businesses.”

In addition to complaints about the fees, developers were concerned that Apple’s competing products could lead it to make unfavorable decisions about them.

For example, Tile’s general counsel, Kirsten Daru, said the company has asked Apple for permission to use ultra-broadband (UWB) technology on iPhones in order to make its item tracking technology more clarifies that it can only use Bluetooth. She said Apple refused the request, then reserved the technology for its own competitor. AirTags, which he announced on Tuesday.

As Apple rolls out a way for third-party developers to rely on more accurate location data, Daru said that to access it, “we need to give Apple unprecedented control over our business and steer customers to the Find My app to find their lost items. “

Andeer argued that AirTags is a separate product from Tile, which currently holds the majority of the space’s market share, and that opening up tools to more third-party developers will encourage competition.

Unclear standards

U.S. Senator Mike Lee, R-Utah speaks during a Senate Judiciary Committee hearing into the FBI investigation into links between Donald Trump’s associates and Russian officials in the 2016 U.S. presidential election , on Capitol Hill in Washington, United States, November 10, 2020.

Susan Walsh | Reuters

Lee asked Andeer to differentiate between the reasons why a paid service through Tinder might earn a commission while a service for Uber might not. Andeer explained that an Uber customer was paying for a non-digital service – a car that showed up at his house – when he didn’t expect the same return from Tinder, saying it would be a different service, in what appeared to be be an innuendo. sex work.

App makers highlighted their reliance on app stores due to their unprecedented access to consumers. But, they argued, that’s not the symbiotic relationship that Apple and Google like to paint.

“We are not succeeding because of what Apple has done, we have succeeded despite interference from Apple,” said Gutierrez. “And we would have been much more successful without their anti-competitive behavior.”

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