Another Antitrust Bill Misses the Mark

After a quiet couple of months, congressional trustbusters are set to make another attempt to reign in big tech and make it harder for them to provide the substantial consumer benefits consumers are used to. The Open App Markets Act (OAMA), recently introduced by Senators Blumenthal (D-CT) and Klobuchar (D-MN), would fundamentally alter how consumers download mobile applications. A companion bill, sponsored by Rep. Ken Buck (R-CO) and Rep. Hank Johnson (D-GA) was also introduced into the House of Representatives. The proposed changes outlined in OAMA would however deny consumers the significant consumer benefits application stores provide.

Under the provisions outlined in OAMA, companies that own or control an application store with over 50,000,000 users would be prohibited from requiring app developers to use an “In-App Payment System owned or controlled” by the app store provider. OAMA would also prevent an app store owner from self-preferencing its own products. Finally, OAM would prohibit app store owners from using “non-public business information” to compete with other products.

Commenting after the introduction of OAMA, Senator Blumenthal stated the bill “will tear down coercive anticompetitive walls in the app economy, giving consumers more choices and smaller startup tech companies a fighting chance.”

However, despite Senator Blumenthal’s positive outlook, The App Association warned the bill would “only benefit big companies like Spotify, Epic Games, and Tile while potentially freezing out small businesses.”

What Senator Blumenthal and other proponents of OAMA ignore is the important contributions app stores provide to small developers. These application stores allow small developers to reach millions of users across the United States. This market reach has allowed small developers to create billion-dollar products.

The prohibition on self-preferencing would be particularly harmful to consumers as it would deny them the high-quality, low-priced mobile applications. For example, both Apple and Google offer their own maps service, Google Maps and Apple Maps. Unlike apps developed by third parties, both of these applications are free to consumers. Additionally, both Apple and Google have made the other’s services available in their application stores.

Prohibiting self-preferencing would make it harder for consumers to access free services by making it harder for them to find free applications. This would ultimately result in more consumers paying for otherwise available services at no cost.

Banning the use of in-store payment methods could also inflict significant consumer harm by denying them access to a secure payment option, potentially allowing cybercriminals to access credit card or bank account information. Since its release in 2014, Apple Pay has developed numerous protections such as encryption and payment authentication to prevent sensitive information from falling into the wrong hands. Google Pay also uses encryption and secure servers to protect consumer’s sensitive financial information.

Likely, other payment portals do not offer the same levels of data protection, leaving consumers sensitive financial information easily accessible to cybercriminals and hackers. These vulnerabilities are created because alternative payment platforms and app developers don’t have the capital to make the sizable financial investments needed to secure financial data. Smaller app developers often use open source code to develop their products that, while available at low or no cost, suffers from vulnerabilities. Large tech companies, on the other hand, have the capital and labor resources to develop in-house custom made codes that have fewer vulnerabilities.

Facebook, Apple, Microsoft, Google, and Apple have collectively invested $2.5 billion in ensuring consumer data does not fall into the wrong hands. Alternative payment platforms and app developers do not have the resources to make these levels of investment.

This point is particularly pertinent because cyberattacks are becoming increasingly common and increasingly sophisticated. Without the robust protections that companies like Google and Apple offer, consumer’s financial information will be left unnecessarily vulnerable by small app developers ill-equipped to meet this threat.

Denying tech companies access to consumer data would also harm consumer welfare by preventing them from understanding evolving consumer demands. Understanding changing consumer demands allows tech companies to develop innovative applications that enhance users’ experience. For example, Apple recognized the growing popularity of mental wellness applications which incentivized the company to create its own free version, Mindfulness.

Without an understanding of changing consumer demands, Apple would likely have not developed this app, leaving consumers with fewer, less innovative,  and more expensive alternatives.

When it comes to assessing OAMA, the question must be asked, who does the bill benefit? While the bill would undoubtedly make it easier for smaller companies to compete with tech giants and challenge their dominance in the application store market, the provisions would create an anti-consumer marketplace that generates fewer consumer benefits. As a result of OAMA, consumers would find it harder to access free apps, face fewer cybersecurity protections, and lose access to future applications that satisfy consumer demands. It’s time Congress recognizes the numerous benefits technology companies bring to consumers and stop crafting overly punitive legislation that will hurt the people policymakers claim to be protecting.

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