Arizona Legislature Considers Intervening in Conflict Between App Developers and App Stores

A bill introduced in the Arizona House of Representatives, HB 2005, would require certain app store operators such as Apple and Google to allow app developers to use independent payment processing software. This law would apply to app stores with over one million downloads per year, but not to digital software stores for game consoles or music players. App makers thus would be able to avoid significant fees associated with their use of the payment processing systems in app stores.

Last week, the House of Representatives narrowly voted in favor of the bill. Its proponents voiced concerns that Google and Apple were monopolizing the markets for iPhone and Android apps, respectively. They believe that the bill will boost innovation and improve consumer choices. Opponents of the bill argued that the legislature should focus on protecting consumers, rather than taking sides in a dispute between companies. They also pointed out that the bill might face constitutional challenges in federal court, even though it applies only to companies and users in Arizona. Meanwhile, an Apple representative noted that the bill could allow app developers to benefit from the Apple app store for free.

However, the bill will not become a law in the immediate future. It must be passed by the Arizona Senate and signed by the Arizona Governor first. Even if it becomes a law, questions of enforcement remain. The fate of the law may hold interest for legislatures in other states that are considering similar proposals. Recently, the North Dakota legislature reviewed and rejected a similar bill, but others are still pending.

Concerns over the rules and fees imposed by app stores have spurred ongoing litigation against Apple and Google. These antitrust lawsuits may be more effective ways of forcing the tech giants to change their policies. Among other goals, they seek to force Apple and Google to allow app developers to use independent payment processors, resembling those envisioned by the Arizona bill. Apple already has responded to this controversy by halving its fee from app store sales for companies that receive less than $1 million per year on the app store.

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