Apple accused of 'power grab' in US Senate hearing over App Store  

Music-streaming service Spotify and Match, an operator of online dating apps, have accused Apple of squeezing software developers that depend on its App Store to reach customers by extracting monopoly profits and squashing competition
Apple accused of 'power grab' in US Senate hearing over App Store  

Senator Amy Klobuchar has introduced legislation that would make it easier to prevent and punish anticompetitive behaviour.

Music-streaming service Spotify and Match, an operator of online dating apps, have accused Apple of squeezing software developers that depend on its App Store to reach customers by extracting monopoly profits and squashing competition.

Executives from the two companies, along with Tile, which makes a tracking device for consumers, urged lawmakers at a Senate hearing to tackle the dominance of Apple and Google over the digital marketplaces where users download apps.

Although Apple and Google hold a duopoly in the western world’s app store ecosystem, much of the ire was directed at Apple, which charges big developers 30% of revenue, a cut that witnesses at the hearing said amounts to a “tax".

“Apple abuses its dominant position as a gatekeeper of the App Store to insulate itself from competition and disadvantage rival services like Spotify,” Horacio Gutierrez, Spotify’s chief legal officer, told the Senate hearing. The streaming service competes with Apple Music. 

Apple’s restrictions on developers, he added, “are nothing more than an abusive power grab and a confiscation of the value created by others”, he said. 

Portion of revenue

App developers have complained for years that Apple and Google force them to give up too big a portion of revenue collected from app sales. They also complain that rules governing app stores are overly strict and inconsistent. 

Mr Gutierrez, for example, complained about what he called Apple’s “gag order”, a rule that prevents Spotify from telling app users they can sign up for Spotify at lower prices elsewhere. Executives also accused Apple of copying products from other developers and retaliating against partners that speak out against its practices.

The hearing, before the Senate Judiciary Committee’s antitrust panel, is part of Congress’s expanding scrutiny of the power of technology companies. Democrats, and some Republicans, are pushing for changes to anti-competition laws that would make it easier for competition watchdogs to bring cases against companies that they say are buying up – and crowding out – rivals.

Senator Amy Klobuchar of Minnesota, who chairs the antitrust panel, said Apple and Google are gatekeepers that have the power to decide how or whether apps can reach iPhone and Android users, even as they compete against apps with their own services.

“Capitalism is about competition,” she said. “It’s about new products coming on. It’s about new competitors emerging. This situation, to me, doesn’t seem like that’s happening when you have two companies really each dominating in different areas.” 

Legislation

Ms Klobuchar has introduced legislation that would make it easier to prevent and punish anticompetitive behaviour, and she said Wednesday’s testimony “strengthened the case for sweeping antitrust reform so companies big and small don’t have to live or die by the whims of monopolies”.

“If these actions aren’t proof of serious competition problems, I don’t know what is,” she said. 

Kyle Andeer, Apple’s chief compliance officer, and Wilson White, a senior director of public policy and government relations at Google, defended their companies’ practices.

Mr Andeer told senators that the App Store revolutionised software distribution by making it possible for developers to reach users in a new way. 

• Bloomberg

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