How Apple and Google killed an Arizona bill aimed at their app store profits

By: - September 7, 2021 1:30 pm

Photo by atmtx | Flickr/CC BY-ND-NC 2.0

Apple and Google hired a bevy of lobbyists in Arizona in early 2021 to kill legislation that would have slashed the profits the companies make through their app stores. 

Rep. Regina Cobb was subjected to a flood of text messages and phone calls from those lobbyists in February when she authored an amendment that would have barred Apple and Google from forcing developers to route all in-app payments through their platforms — a policy that lets the tech giants keep 30% of all purchases.

“When I got to my phone on Monday it was amazing,” Cobb, a Kingman Republican, told the Arizona Mirror about her experience once her legislation was put on the agenda for the House Appropriations Committee, which she chairs. “It was nuts, I had several lobbyists call me and text me over the weekend.”

House Bill 2005 would have prohibited an application platform provider that exceeds downloads of over 1 million Arizona users from making their app store the exclusive place to get applications or use their payment system. It also would have prevented an application platform from retaliating against Arizona developers who chose to not use their platform, and would have given the attorney general authority to receive complaints about application platform providers. 

Apple and Google have been waging a public war with major developers who have revolted against the app store policies. More than a year ago, Apple booted the immensely popular video game Fortnite from its app store after the developer, Epic Games, bypassed Apple to let players purchase in-game virtual currency directly from the company. Google quickly followed suit.

Epic promptly filed multiple lawsuits against both companies

A report by the Tech Transparency Project found that the Arizona lobbying efforts by Apple and Google tripled between January and March. Initially, the companies had two lobbyists from a single firm but later expanded to six lobbyists from three separate firms. 

One of Apple’s lobbyists sent letters to GOP lawmakers from the American Legislative Exchange Council, an organization that connects big businesses with Republican lawmakers to craft legislation, and anti-government activist Grover Norquist that warned Cobb’s legislation was government overreach that would harm consumers. 

The lobbyist, Stuart Goodman, also sent a letter from the Electronic Transaction Association opposing similar legislation in North Dakota. Before the bill in North Dakota was shot down, Apple representatives held a closed-door meeting with the majority of the Senate committee hearing the bill without publishing an agenda, raising questions about open public meeting law in that state. 

Apple and Google lobbyists also killed a similar bill in Georgia. Lobbyists for Apple threatened to pull out of two important economic development projects, one of which is a $25 million investment in a Black college in Atlanta and a multibillion-dollar partnership with Kia to build autonomous vehicles in the city of West Point, according to Politico

Apple denied the claims reported by Politico but public records did show that Apple lobbyists reached out to the Georgia state’s Attorney General’s Office saying that the state could face possible legal actions if the bill were to pass. Georgia legislators never acted on the bill. 

Cobb’s bill barely cleared committee on a 7-6 vote, clearing it to advance to the full House for debate. But by that time, Apple had hired lobbyist Kirk Adams, Gov. Doug Ducey’s former chief of staff, to kill the bill. 

Cobb said this signaled that the company was hedging its bets to make sure that, even if the bill passed, it would be vetoed by the governor. 

Cobb’s bill passed the House 31-29; Republicans supported it while Democrats opposed it. She said she then sought to hold stakeholder meetings, but Apple continued to put the pressure on. 

In a March 11 email to Senate Commerce Committee Chairman J.D. Mesnard, R-Chandler, one of Apple’s lobbyists called the legislation “susceptible to legal challenges.” Over the next two weeks, outside groups would send letters to individual senators opposing the bill, according to records obtained by Tech  Transparency Project. 

The Senate Commerce Committee ended up tabling the bill on March 24, and it never received a hearing. 

Apple took the lead in Arizona to kill the bill, though one email from Google reminded lawmakers that the company is a major economic driver in the state. 

“I went as far as I could possibly go with the timeframe that I had with the pressure that they mounted in a week,” Cobb said, adding that she is planning to bring the measure back in 2022, as it had bipartisan support. 

Other countries, like South Korea, have already passed similar legislation. Australia is considering a similar measure

Cobb said that she believes that the state legislature will have to take the lead on the issue, as the federal government is unlikely to step in. While President Joe Biden has filled his administration with critics of “big tech” and issued executive orders meant to rein in tech companies, some still worry about their influence over his administration

“These communications show that Apple is clearly willing to use thinly veiled threats and appeals to political expediency in order to preserve its stranglehold over App Store developers,” Campaign for Accountability Executive Director Michelle Kuppersmith said in a statement to the Mirror. “Both state and federal lawmakers should be aware of these tactics and stand ready when Apple’s lobbyists inevitably come knocking.”

Google declined to comment for this story and Apple did not respond to a request for comment.

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Jerod MacDonald-Evoy
Jerod MacDonald-Evoy

Reporter Jerod MacDonald-Evoy joined the Arizona Mirror from the Arizona Republic, where he spent 4 years covering everything from dark money in politics to Catholic priest sexual abuse scandals. He brings strong watchdog sensibilities and creative storytelling skills to the Arizona Mirror.