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Protocol | Policy

App makers went to Washington and spilled all their tea on Apple

Apple finally got the Big Tech treatment at Wednesday's hearing on app stores.

Person wearing a mask walks in front of Apple logo

Apple is facing increasing scrutiny from lawmakers.

Photo: Bloomberg via Getty

A few years ago, the dating app giant Match Group wanted to institute new identity verification rules for an app it was running in Taiwan. But when Match went to submit those updates to the Apple App Store, they were rejected. When Jared Sine, Match's chief legal officer, contacted a lawyer for the App Store to ask why, Sine said the lawyer told him, "We should just be glad that Apple is not taking all of Match's revenue."

"'You owe us every dime you've made,'" Sine recalled the lawyer saying.

This was just one of many charges of backroom bullying by Apple that app developers made Wednesday, during a Senate hearing on antitrust violations in app stores. While Google was also there to testify, Apple was undoubtedly the primary target, giving the Cupertino company a taste of the kind of tongue lashing about alleged monopolistic tendencies that other Big Tech juggernauts have come to routinely face.

In a rare show of bipartisan cooperation, senators on the antitrust subcommittee gave representatives from Match, Tile and Spotify ample space to air their grievances against Apple, from veiled threats like the one Sine said he received to accusations of price gouging and technological preferencing.

The developers did not hold back.

Sine, for one, told another story of the time that Tinder developed a new safety feature for LGBTQ+ users traveling in countries with discriminatory laws. When it came time to push the update to users, Sine said Apple blocked the new feature for two months, arguing that it violated the "spirit" of a company policy, but not offering Tinder ways to address Apple's concerns.

"In order to get that launched, we had to go all the way up to talking to the chief executives, through our chief executive … in order to actually get that app unblocked two months later," Sine said.

Spotify's chief legal officer, Horacio Gutierrez, zeroed in on the 30% commission fees that Apple began charging apps like Spotify that sell digital goods, even as Apple was planning to launch its own competitor, Apple Music. Gutierrez said the new fees forced Spotify to raise its prices from $9.99 to $12.99. Shortly after, Gutierrez said, "Apple launched Apple Music at $9.99, which meant they were now undercutting us on price."

He, too, told stories of app updates and bug fixes being tied up for months in Apple's approval process. "They've basically thrown the book at us in a number of ways to make it hard for us to continue to sustain our decision to speak up," Gutierrez said.

Tile's general counsel, Kirsten Daru, meanwhile, focused on technical hurdles that Apple has put in the company's way at the same time Apple was developing its own competitive tools with the Find My app and its newly announced AirTags. Daru accused Apple of serving prompts encouraging users to turn Tile off, revoking a "critical permission" that now requires users to go "deep, deep, deep into their settings to turn Tile on" and refusing to give Tile access to chips that would enable Tile to give its users more precise information about the location of their belongings. "Apple refused our requests, and therefore we cannot bring that innovation to the market for the benefit of our customers," Daru said, noting that Apple is reserving that technology for its own tools.

With each charge, the senators turned to Apple's chief compliance officer, Kyle Andeer, for explanation and appeared to find his answers lacking. Why, for instance, does Apple need to take a 30% commission fee, asked committee chair Amy Klobuchar, citing a House antitrust subcommittee report that suggested while Apple makes $18 billion a year on the App Store, it spends less than $100 million a year running the App Store.

"Those look like monopoly profits," Klobuchar said.

But Andeer was unable to counter those figures with any concrete numbers, saying simply, "Apple's invested significant sums in technologies, resources, tools, to allow developers to build their apps, far in excess of this $100 million figure."

Andeer left ranking member Mike Lee similarly dissatisfied with his answer to questions about why some apps like Tinder have to fork over commission fees while other apps like Uber don't. Andeer argued that there was a fundamental difference between using an app to book a ride and using an app to plan a date. "When I'm using Uber or Lyft, I am calling a car to my house to physically get in it and drive somewhere. When I'm using — I don't use these — a dating service to meet someone, I'm not using it to pay that person to come to my house and to go on a date," Andeer said. "That's called something else."

To Lee, Andeer's distinction between "meeting a stranger for transportation and meeting a stranger to go to dinner," was strained. "I feel like unfrozen caveman lawyer as portrayed by Phil Hartman on 'Saturday Night Live,'" Lee said. "I'm not grasping it."

Democratic Sen. Jon Ossoff, meanwhile, poked holes in Apple's claims that its review processes are meant to ensure security in the App Store, asking why it's "trivially easy" to find scams, fake reviews and abusive billing practices in the store today. "Apple is making a cut on those abusive billing practices, are you not?" Ossoff asked. Andeer said the company doesn't take a cut "if we find fraud."

For Apple, the pile-on was relatively new, if not entirely unexpected. For years now, the company has skirted the scrutiny that social networking giants have faced around content moderation and privacy, mainly butting heads with lawmakers when it comes to debates over encryption. But the pressure that has been mounting on Apple to defend its App Store practices for years now is finally coming to a head. Next month, the company will have to further defend those practices in court in a lawsuit filed by Epic Games.

While Apple bore the brunt of the accusations Wednesday, the witnesses did aim at least some of their ire at Google, as well. Sine said both Apple and Google had made it hard for Match to filter out users who are under 18 and to cross check users with registered sex offender lists. But by far his most damning allegation came in response to a question from Sen. Klobuchar about whether Match had ever experienced retaliation from any company for speaking out.

Sine replied that in fact, the night before the hearing, Match Group received a phone call from a Google executive, asking why Sine's testimony differed from comments the company had made during an earlier earnings call. Wilson White, Google's director of public policy, dismissed the charge as an "honest question" from Google's business development team, not a threat.

But Sine wouldn't let Google off the hook so easily. "When you receive something like that from a company that can turn you off overnight," he said, "you're always a little intimidated."

Protocol | China

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Photo: Getty Images

Beijing's strike against the private tutoring and ed tech industry has rattled the market and led observers to try to answer one big question: What is Beijing trying to achieve?

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Is this tech? Or is it just a bike with a screen?

Image: Peloton and Protocol

One of the breakout hits from the pandemic, besides Taylor Swift's "Folklore," has been Peloton. With upwards of 5.4 million members as of March and nearly $1.3 billion in revenue that quarter, a lot of people are turning in their gym memberships for a bike or a treadmill and a slick-looking app.

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Photo: alvarez/Getty Images

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Protocol | China

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Collage: Weibo, Bilibili

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