Arizona is taking a stand against big tech. App developers and users in Arizona may no longer be subject to the payment monopoly of Apple and Google.
A major amendment to Arizona House Bill 2005 passed in the House Wednesday by 31-29, and will now move on to the state Senate, making it one step closer to become state law. If it passes in the Senate, it will head to Gov. Doug Ducey for his signature.
The amendment, introduced by republican Rep. Regina Cobb, prohibits Apple and Google (and other app distribution platforms with more than a million downloads from Arizona users) from requiring app developers based in Arizona to use their preferred payment system. In other words, Arizona app developers can use third-party payment systems, blocking Apple and Google from collecting the 30% commissions on app sales and in-app purchases the companies have been collecting for years. According to the Coalition for App Fairness (CAF), Apple’s revenue on app tax alone is more than $15 billion.
The legislation also exempts users living in Arizona from having to use “a particular in-application payment system as the exclusive mode of accepting payments.” It’s unclear whether this applies to purchases from app developers outside the state, preventing those developers from having to pay commission on app purchases from Arizona users.
The bill amendment also blocks Apple, Google and companies like them from retaliating against app developers who decide to use alternative payment systems.
If the bill passes, Arizona would become the first state in the country to make a stand like this against the tech giants, though a similar (yet broader) bill was recently rejected in North Dakota’s state Senate. Other similar bills are making their way through legislatures in states like Hawaii and Georgia.
The bill’s introduction has led to intense lobbying from Google and Apple. Lobbyists have joined forces with Arizona Chamber of Commerce and people like Apple’s Rod Diridon have tried negotiating with Cobb. Apple and Google lawyers even made arguments to Arizona House of Representative lawyers that the bill is unconstitutional.
The event sparked a celebration of sorts on Twitter. Danish programmer and founder of Basecamp David Heinemeier Hansson, who provided testimony in support of the bill, praised Arizona and asked for recommendations for where in Arizona to build Basecamp headquarters. He even asked for restaurant recommendations.
Matt Stoller from the American Economic Liberties Project noted the historic victory.
“So something extraordinary happened today on the anti-monopoly front. And not where you’d expect. Not in Congress. Or at the Federal level. Or in Europe. But in Arizona,” Stoller tweeted. “Some legislators stood up to Apple and Google. And they won.”