Illinois Bill Seeks to Limit App Stores’ Control Over Payments

The groundswell against the app stores and their commissions comes to the states.

Apple and Google have been in regulators’ crosshairs at the federal level, and in the courts, over the operating structure of their app stores.  More specifically, scrutiny had focused on how those tech titans facilitate transactions, and how much in commissions they make from sales tied to their apps.

The pressure has been global in scope. In one example, as reported this week, Korean telecommunication regulators banned Apple Inc., Alphabet’s Google and other app store operators from forcing software developers to use their payments systems.

Read Here: South Korean Regulator Releases Rules on in-App Payments

And in a bit of about-face, Apple said it will collect a 27% commission on payments made through alternative payment methods for dating apps in the Netherlands, a reduction from 30%.  That action was done in order to comply with a January order from the Netherlands Authority for Consumers and Markets (ACM).

And here in the United States, last month the Senate Judiciary Committee voted to pass legislation that would limit those commissions.

Read More: Apple’s App Store Under Congressional Scrutiny

Efforts at the State Level

As for the statewide efforts: in Illinois, there is the “Freedom to Subscribe Directly Act.”

The bill would mandate that platform operators — where downloads to users in the state exceed 1 million in a given calendar year — not require in-state developers to use certain in-app payment systems.  In addition, the platform firms may not “retaliate” against in-state developers that use in-app payment systems that are not owned or operated by the provider.

The legislation making its way through the Illinois assembly would be a first, as noted by Illinois Newsroom.  If passed, then Illinois would be the first state to legislate in-app purchases.

We contend that it is unlikely that we’d see a state-by-state progression of bills that would effectively curb Apple and Google’s app endeavors.  Fifty bills, after all, would take a while to formulate and get passed. But the pressure thus comes to bear on the tech giants on another front.  In states where there are a relatively high number of app developer firms (let’s say California, for example), we may see such efforts proliferate.

The stage is set for such legislative momentum: Back in September, a ruling handed down from a U.S. federal court said that Apple must allow developers to send users to outside payment systems, which in effect strikes down exclusivity. Apple, too, has been allowed to continue charging commissions, which at present have spanned a roughly 15% to 30% range.