A bipartisan bill to impose restrictions on app stores likely would give publishers more flexibility in the way they distribute apps and charge subscription fees. The bill comes as lawmakers and regulatory agencies scrutinize Apple and Google’s dominance in the app marketplace.
Sponsored by Sens. Richard Blumenthal (D-Connecticut), Amy Klobuchar (D-Minnesota) and Marsha Blackburn (R-Tennessee), the Open App Markets Act aims to promote competition, reduce costs for consumers and improve service quality.
The legislation would prevent big tech companies from forcing app publishers to use their app stores or payment systems. It also would force the companies to let app developers inform consumers about lower prices and allow people to “sideload” apps – or download them outside of the Apple’s App Store or Google Play.
Apple has resisted the idea of allowing sideloading, given security concerns, while Google has been accused of making the practice too cumbersome for users of Android mobile software.
However, Apple this year changed the fee structure of the App Store, claiming it wanted to help smaller businesses struggling during the pandemic. The iPhone maker cut the commission on downloads, subscriptions and in-app fees
from 30% to 15% for any business that makes less than $1 million a year through the App Store. It maintained the 30% rate for businesses that make more than $1 million, excluding the commission payments to the company.
Presumably, publishers that distribute apps from another source, such as their own app stores or websites, would avoid the “Apple tax,” as the company’s critics have called it. Publishers also could use other payment methods than Apple Pay or Google Pay.
Having greater control over app distribution would give publishers another way gather to first-party data from subscribers. First-party data has become more valuable for publishers that can charge higher CPMs for improved ad targeting.
There are ways for publishers to avoid app store fees by directing people to pay for a subscription by phone or on a website. In my experience, many publishers direct readers to pay for a subscription by phone or on a website, then let them use the same login credentials in an app.
It’s too early to tell whether the Open App Markets Act will ever reach President Biden’s desk for approval, but the threat of regulation may compel Apple and Google to loosen their app store restrictions and give publishers freer reign over their apps.