On Wednesday, the Arizona State Senate was supposed to vote on Arizona HB2005, a controversial bill that would’ve dramatically changed how both Apple and Google’s app stores work. But per a Verge report, the vote never happened. Despite being listed on the senate’s agenda, the bill was skipped without an explanation.
Since the bill was passed earlier this month in Arizona’s House of Representatives, both Apple and Google have vehemently opposed it. According to a Protocol report, both tech giants have sent a swarm of lobbyists to the state. It’s easy to understand why. In a nutshell, HB2005 would’ve effectively prohibited app stores from banning alternative in-app payment systems. Companies like Apple and Google would also be barred from taking retaliatory action against apps that opt for an alternate payment system.
In other words, the bill was a huge threat to the infamous 30% commission both Apple and Google levy on developers for most app sales and in-app transactions. This so-called Apple Tax has been hotly debated for the past year, partly because of heightened antitrust scrutiny against Big Tech and partly because of the brouhaha sparked by Epic Games’ spat with Apple over in-app transactions in Fortnite. Both Apple and Google have since cut that commission rate to 15% for developers who make less than $1 million.
The fact the vote was skipped has caused at least one Apple critic to accuse the company of working behind the scenes to kill the bill. Basecamp co-founder David Heinemeier Hansson tweeted yesterday, “The big show turned out to be a no show. The bill was killed in mid-air while on the agenda with a backroom deal. Apple has hired the governor’s former chief of staff, and word is that he brokered a deal to prevent this from even being heard. #America4Sale.” Hansson had submitted testimony supporting HB2005, and has vocally criticized the company after the App Store debacle with Hey, Basecamp’s email app, last summer. Hansson is also involved with the Coalition for App Fairness, a nonprofit industry group whose mission is to clap back against what it views to be anticompetitive app store policies.
Per Protocol, Apple had sent its own lobbyist, Ron Diridon, to Arizona, on top of hiring Kirk Adams, the former chief of staff to Arizona Governor Doug Ducey and speaker of the Arizona House of Representatives. The report also cited Arizona State Rep. Regina Cobb, who sponsored the bill, saying, “We went through a very difficult weekend where Apple and Google hired probably almost every lobbyist in town.”
Google declined to comment for this story. Apple did not immediately respond to a request to comment.
The Arizona bill is not unequivocally dead, but the development doesn’t bode well for the legislation’s passage. North Dakota also introduced a similar bill—though broader in scope—that failed to pass in February. The Coalition for App Fairness is also pushing other state legislatures to introduce similar bills, including in Illinois, New York, Georgia, Minnesota, and Massachusetts. The Arizona bill was significant in that it was the furthest along, but was also beset by some challenges that may reappear in other state efforts. For starters, while some posited this would be a boon to small businesses in Arizona, other legislators raised concerns that the bill was rushed, whether it was a matter better handled by the federal government, and how it might interfere with the ongoing Epic Games v. Apple case in California.
“The legislative session is not over. We will continue to push for solutions that will increase choice, support app developers and small businesses and put a stop to monopolistic practices,” said Meghan DiMuzio, executive director for the Coalition of App Freedom, in an email to Gizmodo.
In any case, even if Apple and Google lobbyists managed to squash Arizona’s bill, there’s no guarantee it can play whack-a-mole with every single one of the other state bills in the works. Whether individual state laws regarding app stores can be effectively enforced without federal intervention, however, is another question for which there’s no clear answer.
Update, 03/25/2021, 12:30pm: This article has been updated to include a statement from CAF.