Lawyers representing Apple and Google found themselves in hot water Wednesday at a Senate Judiciary Committee hearing on the companies’ app stores and whether they stifle competition.
Representatives of Spotify, Tile and Match Group, which owns dating apps including OKCupid and Tinder, argued that the Silicon Valley giants are unfairly wielding their power as app store overseers and are deliberately limiting competition, ultimately harming consumers.
Central to the issue are in-app payments Apple, Google and others extract from developers in exchange for listing an app in their app stores, which give them a 15% to 30% cut of every transaction made there.
In 2020, the payments amounted to a combined $33 billion for Apple and Google according to data tracked by the app analytics firm Sensor Tower.
Jared Sine, Match Group’s chief legal officer, told senators the fees comprise his company’s single-largest expense and will soon eclipse half a billion dollars a year.
Those concerns were echoed by Spotify’s legal officer Horacio Gutierrez, who said those costs would inevitably make it back to the consumer, thereby making Apple’s offerings more attractive.
“Apple Music is one of our principal competitors,” Gutierrez noted. “Its advantage is not better service; instead, it is Apple’s total control over the App Store, which allows them to impose rules that disadvantage Spotify and benefit Apple’s own service.”
In earlier hearings, Apple representatives have argued that, as a private company which invented both the iPhone and the app ecosystem, it should be free to profit from it as it sees fit.
Gutierrez argued the opposite was true: Third-party apps turned the iPhone into a behemoth, not the other way around.
“Apple therefore has things exactly backwards when it claims that companies like Spotify are free-riding on Apple’s innovations,” he said. “It is Apple’s success that rode in large part on the creativity of third-party app developers that created demand for Apple’s devices. The proof is Apple’s own slogan: ‘There’s an app for that.’”
Apple also maintains the fees are justified as a matter of paying for App Store upkeep. Chief Compliance Officer Kyle Andeer noted the company spends “hundreds of millions” each year curating the store and reviewing each app “for privacy, safety, security and performance.”
That argument didn’t fly with Sen. Jon Ossoff (D-Ga.), who noted it’s “trivially easy” to find predatory scam apps on both Google’s and Apple’s platforms that, given false legitimacy by thousands of fake reviews, trap users in expensive billing cycles from which it can be hard to unsubscribe.
Scam apps are likely making millions on the App Store, an investigation by The Verge found. And when a bad actor rakes in the cash, so does Apple.
As for the claim that oversight of the app ecosystem keeps users safe, Sine argued the opposite is true, recalling Match’s efforts to keep underage users off its apps. Sine said Match has repeatedly had its apps revoked when they tried to verify a user’s age by requesting their ID.
“Senators, this is not curation as we’ve been told. It is iron-fisted monopoly control,” he said. “When an industry player has the power to dictate how apps operate, how much they will be forced to pay and, in many cases, if they will even survive, it is a monopoly. This is the same behavior of the robber barons before them.”
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