Apple wins victory as North Dakota votes down bill that would regulate app stores


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Apple CEO Tim Cook delivers the keynote address during the 2020 Apple Worldwide Developers Conference at Steve Jobs Theater in Cupertino, California, June 22, 2020.

Brooks Kraft | Apple Inc. via Reuters

The North Dakota state senate voted 36-11 on Tuesday not to pass a bill that would have required app stores to enable software developers to use their own payment processing software and avoid fees charged by Apple and Google.

The vote is a victory for Apple, which says that the App Store is a core part of its product and that its tight control over its rules keeps iPhone users safe from malware and scams.

North Dakota’s bill is the first major U.S. state-level legislation to address the Apple and Google app stores, which take fees from app store sales up to 30%, including in-app purchases of digital items. If the state senate had passed it, it would still have been debated and voted on in the North Dakota house.

The North Dakota bill targeted Apple’s fees by requiring companies that make more than $10 million per year in the state through app stores — essentially, just Apple and Google — would be required to offer alternative payment processors for purchases through the app store, allowing developers to avoid Apple or Google’s cut. It would only apply to companies based in North Dakota.

Apple opposes the bill. Last week, Erik Neuenschwander, an Apple official who focuses on privacy engineering, testified that the bill “threatens to destroy iPhone as you know it” and that Apple customers can buy other brands of smartphones if they want. Phones running Google’s Android software can already use alternative app stores.

“Simply put, we work hard to keep bad apps out of the App Store; Senate Bill 2333 could require us to let them in,” Neuenschwander said. “For a store owner, that would be like the government forcing you to stock your shelves with products you know lack in quality, authenticity, or even safety.”

An Apple representative declined to comment on Tuesday.

One reason why this North Dakota bill was closely watched is that it could inspire other states, such as Arizona, which are currently debating legislation targeting Apple’s commercial power.

North Dakota is an odd venue for this…