Arizona Bill Could Shake Up Apple, Google Business Model

In an attempt to move small companies out from under the shadow of big tech companies, an Arizona bill looks to let app developers set up their own payment systems to process user purchases.

a close up of the Apple App Store icon on a smartphone screen
Shutterstock/BigTunaOnline
A new piece of Arizona legislation could allow app developers to use their own payment systems to process user purchases, raising a new antitrust challenge for big tech companies like Apple and Google.  

HB 2005 states that any “digital application distribution platform” with more than 1 million cumulative downloads a year from Arizona users would be required to allow app developers to implement their own alternative payment systems.  

If the bill becomes law, app developers would no longer have to pay hefty fees to Apple and Google, including a 30 percent tax on all payments made for apps and in-app purchases.

“Essentially, the bill would prevent app store operators like Apple and Google from forcing consumers to use particular payment systems within app stores,” Janelle Wrigley, director of the Antitrust Division at Thomson Reuters Practical Law, said. 

The Legislature’s concern, she said, is that Apple and Google have too much control when it comes to consumers downloading apps.

Arisha Hatch, vice president of nonprofit Color of Change, said another concern is the impact big tech companies’ fees and taxes have on smaller businesses and startups. 

“A vote against the legislation in Arizona all but ensures that these corporate giants will continue to subject small and medium-sized app developers — many of whom are Black and people of color — to unfair business practices,” Hatch said in an email. “Arizona lawmakers have the opportunity to take the lead on enacting stronger protections against the abuses of big tech.”

The Coalition for App Fairness, another nonprofit organization, voiced a similar message about the bill and what it would mean if it were passed.   

“Arizona put a marker down and became the first state in the nation to advance a digital market that is free and fair,” said Meghan DiMuzio, executive director of the Coalition for App Fairness, in an email. “While this was cause for celebration, it was only a first step toward achieving a truly level playing field for all.”  

The Arizona Senate, she said, must move a solution forward that builds on this momentum to provide consumer freedom, lower costs and increase developers’ ability to thrive and innovate.

If the Arizona Senate approves the bill, it could lead to widespread change, Wrigley said.

“If the bill ends up passing in Arizona, I think there will be a rush to pass similar legislation in other states,” she said. “There is an opportunity here to change the rules of the game using state legislature.” 

Katya Maruri is a staff writer for Government Technology. She has a bachelor’s degree in journalism and a master’s degree in global strategic communications from Florida International University, and more than five years of experience in the print and digital news industry.