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Arbitrary Decisions

Rivals Claim Apple, Google Unfairly Leveraging App Stores

Apple and Google unfairly leverage their dominance over the app store market and engage in intimidation, representatives from Spotify, Match and competing companies told the Senate Antitrust Subcommittee Wednesday. Chairwoman Amy Klobuchar, D-Minn., and ranking member Mike Lee, R-Utah, detailed how the two companies’ unprecedented power lets them make arbitrary decisions that determine users and competitors' fate.

There’s no competition for the two app stores, said Klobuchar, describing how Apple banned the process of “sideloading” -- users downloading apps directly from the internet, avoiding Apple commissions. She noted that Google allows alternative app stores and sideloading, but the overwhelming amount of downloads occur on the Google App Store. She called Apple’s App Store a “walled garden.”

Lee cited Amazon, Apple and Google banning Parler in January (see 2104190047). The widespread ban shows the companies are anticompetitive, said Lee.

Klobuchar asked Spotify how Apple fees affect the company’s ability to compete. Due to Apple’s 30% charge, Spotify had to raise its monthly price from $9.99 to $12.99, said Chief Legal Officer Horacio Gutierrez. When this change occurred, Apple was acquiring Beats Music and eventually launched Apple Music at $9.99 monthly, he said. Spotify attempted to relay certain savings options to consumers, but Apple threatened to kick Spotify off the App Store, he said. Klobuchar noted the App Store bars developers from telling consumers the apps would be cheaper if they're bought online.

Spotify is incredibly successful and aggressive in driving a hard bargain with creators, said Apple Chief Compliance Officer Kyle Andeer, citing Spotify’s 155 million subscribers. Tens of millions of those use an iPhone, and less than 1% pay a 15% commission to Apple, he said. Spotify is a great company that pushes Apple to compete, he said.

Klobuchar asked Tile how Apple is using its App Store leverage to compete with a similar product. Tile offers an app that helps users track and find items like keys, wallets and phones. Tile General Counsel Kirsten Daru said Apple’s Find My app is turned on by default, and a user has to go deep into settings to turn it off with a user password. Turning on Tile also requires bypassing several pop-ups, she said.

Andeer argued that Apple competes on the merits and is expected to launch its own location tag product in coming days. (It was announced Tuesday.) Apple is excited about its AirTag, which is different from any other product, he said. He noted Tile has 80%-90% of this market.

Lee asked Match Group Chief Legal Officer Jared Sine about his claim that Apple and Google refused to work with the company to improve user safety. Sine said Apple and Google collect information about users, and they know the age of the users, suggesting they weren’t willing to communicate about that. Sine noted his fears about testifying, saying the two companies “could hurt us in little ways, they could hurt us in big ways. We're all afraid is the reality."

When Lee asked Daru about Apple’s tactics, she told him she was under an Apple nondisclosure agreement. Lee suggested Apple grant a temporary waiver. Andeer balked, saying Apple doesn’t want proprietary information shared. He also balked when asked to grant a waiver for her to discuss contractual information only.