House Bill 2005, a bill proposed by Rep. Regina Cobb to stand up to Big Tech, was pulled in late March because it “didn’t have the votes.”
Arizona would’ve taken a stand against the tech giants’ monopoly of app store purchases if HB2005 had passed. The bill had gotten further in the legislative process than similar bills proposed in other states, but, as in the other states, lobbying by Apple and Google inevitably killed it. A promising bill in North Dakota didn’t even end up getting a hearing.
“They hired almost everybody in town to lobby against us,” says Cobb. “The lobbying stops everything. We could’ve gone further.”
Cobb says that the companies’ lobbyists argued before the state Senate’s Commerce Committee, where it was pulled by and aggressively lobbied individual committee members. In the end, Cobb thinks that committee members were making excuses to vote “no.”
What is HB2005 and why does it matter?
HB2005 would’ve prohibited Apple and Google from requiring app developers based in Arizona to use their preferred payment system, which primarily includes Apple’s App Store and Google’s Google Play store. Instead, Arizona app developers would be able to use third-party payment methods, like Visa, Mastercard, American Express and Discover, for their in-app purchases.
Currently, Apple and Google collect 30% commissions on app sales and in-app purchases for apps with less than a million downloads. This benefits large apps because they don’t have to pay any tax at all and further hinders the smaller app developers. Consumers are also affected because these apps have to increase prices to cover the tax.
Cobb says she can’t find out what Arizona apps are being affected, but she notes that 16% of all the apps in these app stores are paying 30% for the ability to be in the app store. According to the Coalition for App Fairness (CAF), Apple’s revenue on app tax alone is more than $15 billion. But the tax is about more than the money, according to Cobb. It’s about monitoring the data. It allows Apple or Google to use the data to be competitive. For example, that data can help Apple to easily create an app to compete with another growing app.
Cobb doesn’t believe Apple’s claims that the 30% tax is used for security. How can that be, she wonders, if 84% of the apps in the app store pay nothing? Additionally, Apple has seen several security breaches.
Cobb proposed the bill because this is another example of the monopoly of Big Tech and antitrust violations. “There’s just no fairness,” she says. And there’s no contract or ability to agree to the terms. Apps either pay the 30% to be allowed to be on the app store or forget about it. But she knew she had a hard road ahead of her to get the bill passed. Still, she went for it.
“I knew what my opposition was going to be,” says Cobb.
What happened to the bill?
Cobb saw an opportunity to add an amendment to the HB2005 technical bill. It was a last minute introduction that went straight to committee and HB2005 narrowly passed 31-29. One of the main reasons for this, she says, is that Apple wasn’t initially threatened by the bill and hadn’t started seriously lobbying.
The bill went to the Senate Commerce Committee, where committee chairman J.D. Mesnard agreed to a hearing. However, after a major stakeholder meeting where Apple and Google argued their position, Chairman Mesnard decided to not have a hearing after all, claiming there weren’t going to be enough votes. But Cobb disagrees.
“I think if I had a hearing, I could have gotten the votes,” she says.
Apple and Google argue that this is something that should be decided by the courts. But there’s been a case in California that’s gone on for 10 years. Ultimately, this is another example of the power of Big Tech and their deep pockets.