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Apple's App Store fight heads to North Dakota

And the company is more worried than you might expect.

Apple's App Store fight heads to North Dakota

SB 2333 is making Apple worry.

Image: Apple

There's a new bill that's making Apple nervous, and it's called SB 2333.

It spans all of two pages and makes its point quite clear. It says a "digital application distribution platform" that does than $10 million in revenue in North Dakota each year — which includes every major app store — cannot:

  • "Require a developer to use a digital application distribution platform or digital transaction platform as the exclusive mode of distributing a digital product."
  • "Require a developer to use an in-application payment system as the exclusive mode of accepting payment from a user to download a software application or purchase a digital or physical product through a software application."
  • "Retaliate against a developer for choosing to use an alternative application store or in-application payment system."

Where did this come from? Kyle Davison, the North Dakota state senator who co-sponsored SB 2333, told me the Coalition for App Fairness originally brought up the bill to a firm in Fargo, North Dakota, where Davison and others are working to create more of a tech scene.

  • "We have created an entrepreneurial environment in our community ... that really revolves around innovation," he said. He saw SB 2333 as a way to benefit tech workers in the state, as well as hopefully entice people to move there.
  • It's not a crazy idea: People move to escape income tax, so why wouldn't some software companies move to escape a 30% app store commission?

In essence, the bill demands every platform run like the Mac does. Sure, you can have an app store, charge 30%, use your payment processing, go wild! But you have to also allow people to install and pay for apps in other ways.

  • That is precisely what people like Tim Sweeney and David Heinemeier Hansson have been asking for in recent months. Heinemeier Hansson testified in a hearing about the bill yesterday, and had prepared remarks — which he mostly didn't get to, in favor of refuting the "nonsense" arguments against the bill — that said "the 17 lines of SB 2333 read like music. Written in a language I can understand without hiring counsel to parse it for me."
  • Apple's Erik Neuenschwander made the opposite case, saying that the App Store's ability to stop malware, engender trust and make things easy is crucial. "Senate Bill 2333 threatens to destroy [the] iPhone as you know it," he said.

Before you write this off as being the efforts of one state far afield of the tech industry: don't. It's significant in and of itself that a bill like this made it to public debate, and it obviously has Apple concerned enough to send Neuenschwander, its manager of user privacy, to testify.

  • Davison said after the hearing that he couldn't believe how much attention the issue had gotten: "I think it raises an awareness not just in me but in my colleagues that it is a real issue."
  • He didn't sound particularly confident that it would pass, at least in this first incarnation, but said it was clear that this conversation needed to happen both in North Dakota and elsewhere.
And you should expect to hear about this elsewhere. There's a similar bill under consideration in Arizona, SB 1642, which argues for the exact same thing as the North Dakota bill in almost the exact same way. And I'm told there are other laws like these coming sooner rather than later.
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