Minnesota and Arizona Bills Aim to Let Developers Skirt Apple's In-App Purchase Rules

After North Dakota tried and failed to pass legislation that would have paved the way for third-party App Store options, Minnesota and Arizona have introduced new bills that would loosen Apple's control over ‌App Store‌ developers.

A Minnesota bill shared by Star Tribune would force Apple and Google to keep products from Minnesotan developers on their app stores even if those developers sell them directly or through other channels, skirting current in-app purchase rules.

Supporters of the bill believe the bill would allow developers in Minnesota to avoid the commissions collected by Apple and Google.

"A lot of people are concerned about the increased influence and power that Big Tech has, and I think there's a lot of interest in trying to make sure that we have a fair and open digital economy," said Rep. Zack Stephenson, DFL-Coon Rapids, who is sponsoring the bill in the House.

Lobbyists for Apple and Google have allegedly already started aiming to stop the proposal. "They are loading up," said Minnesota Representative Zack Stephenson. "I understand that they have been reaching out to some of my colleagues. I heard whispers of that occurring throughout the Capitol. I think we got someone's attention."

Apple does not allow developers to use their own in-app payment systems, instead requiring all apps that sell digital goods and subscriptions to do so through Apple's in-app purchase system. Apple collects a 15 to 30 percent fee from all in-app purchases.

Under the terms of the Minnesota bill, Apple and Google would not be allowed to retaliate against a developer for using an alternative system to charge customers, which is something that Epic Games tried to do last year. Epic attempted to use a direct payment option, violating Apple's ‌App Store‌ rules and resulting in the Fortnite app being removed from the App Store.

A similar bill in Arizona would also prevent developers from being forced to use Apple and Google's in-app purchase options. As highlighted by The Information earlier this week, the bill was advanced by the Arizona House committee and will now go to a broader vote.

North Dakota's failed bill would have allowed for third-party App Stores, also giving developers an alternative to Apple and Google's in-app purchase systems and fees, but it did not pass.

Apple Chief Privacy Engineer Erik Neuenschwander advocated against the North Dakota bill, telling the senate that it "threatens to destroy the iPhone as you know it" by requiring changes that would "undermine the privacy, security, safety, and performance" of the ‌‌‌iPhone‌‌‌.

U.S. antitrust regulators last year held an investigation into Apple's ‌App Store‌ fees and policies. The inquiry ultimately resulted in a 450 page report from the U.S. House Judiciary Antitrust Subcommittee recommending new antitrust laws to address Apple's monopoly over software distribution on iOS devices. That report has not yet led to any new laws.