Senate bill targeting Apple and Google in-app payments moves forward

The Open App Markets Act would also force Apple to allow iOS sideloading if it becomes law.

NurPhoto via Getty Images

A bill targeting Apple and Google's app store restrictions has taken a step forward. The Senate Judiciary Committee voted 20-2 to advance the Open App Markets Act, with only Sens. John Cornyn and Thom Tillis opposing. The vote showed once again that there's bipartisan support for the bill.

Should the legislation become law as it stands, it would prevent app marketplace owners with more than 50 million users in the US from locking third-party developers into their payment systems. The App Store and Google Play Store, which require third-party apps to use their respective payment systems, pass that threshold.

They wouldn't be able to block or punish developers from offering apps at other prices on different platforms, and they'd have to let developers contact their users with "legitimate business offers, such as pricing terms and product or service offerings." Another provision would force Apple and Google to let users install third-party app stores or sideload apps. This would have a bigger impact on Apple, since Android already allows sideloading.

Apple and Google have opposed the bill, claiming that it would put user security and privacy at risk. They said the same things about the American Innovation and Choice Online Act, a more sweeping tech reform bill that the committee passed last month. Both bills will go to the Senate floor for debate and a vote.

The stakes are high for both companies. The App Store and Google Play Store each take a 15 percent cut of in-app purchases up to the first $1 million developers make in annual revenue. After that, the fees rise to 30 percent.

Google parent company Alphabet reports Play Store revenue under "Google other revenues," which also includes hardware and non-ad income from YouTube. That business segment brought in $8.2 billion last quarter, a year-over-year increase of 22 percent. App Store revenue falls under the Apple's services segment, which raked in $19.5 billion in Q4.

Apple was last year ordered to allow developers to direct users to other payment methods as a result of its legal battle with Epic Games. An appeals court judge granted a last-minute delay before the change was supposed to take effect.

This article contains affiliate links; if you click such a link and make a purchase, we may earn a commission.