Arizona legislators just passed an anti-monopoly bill in a 31-29 vote, which could have big implications for Apple, Google, and, weirdly enough, Fortnite.
Arizona House Bill HB2005 “restricts the ability of certain digital application distribution platforms to require use of a specific in-application payment system.” (You can read the text of the bill here.) This restriction applies to digital application distribution platforms like the iOS App Store and Google Play, and any other distribution platform that exceeds 1 million cumulative downloads in a single calendar year.
It also bans distribution platforms from requiring Arizona-based app developers to use “a specific in-application payment system as the sole method of accepting payments.” So Apple’s requirement that all in-app purchases must go through its own payment processing mechanism would no longer apply to developers like Epic Games and others who want to give their customers a direct payment option.
If the bill becomes state law, companies like Apple and Google would also be banned from retaliating against developers for using an in-app payment system other than their own. In the case of Epic Games, Apple and Google removed Fortnite from their respective app stores because Epic added a direct payment method, which violated Apple and Google’s terms of service for developers.
“Bills like the one approved by the Arizona House today would help address the range of harms that gatekeepers like Apple and Google pose to small businesses, entrepreneurs, consumers and local communities,” said Pat Garofalo, Director of State and Local Policy at the American Economic Liberties Project, in a press release today. “That the bill successfully passed is proof that there is a growing desire to rein in the power of the Big Tech companies that hold sway over key areas of commerce.”
Ultimately, HB2005 would allow Arizona-based developers to circumvent the “Apple Tax,” or the 30% commission (or 15% for developers that make less than $US1 ($1) million a year) takes of every in-app purchase. As Gizmodo reported previously, Fortnite generated $US43.4 ($56) million in consumer spending on the App Store globally in July 2020. No doubt that number has dropped drastically after Apple removed Fortnite from the App Store in August of last year. California District Judge Yvonne Gonzalez Rogers ruled last October that Apple was legally allowed to keep Fortnite out of its App Store.
The next court date between Apple and Epic Games is set for May 3, with Gonzalez Rogers presiding as judge again. According to MacRumors, the case is set to take place in person this time, with special accommodations being made for witnesses who can’t travel due to covid-19 restrictions. Prior to the trial, Apple CEO Tim Cook will need to sit for a 7-hour disposition.
HB2005 still has to be passed by the Arizona Senate and signed by Gov. Doug Ducey before it becomes law, however, and it seems unlikely that that will happen before Apple and Epic go to trial in two months. It’s also unclear how exactly Arizona would enforce the law, which would almost certainly face a legal challenge if passed.