Arizona eyes law that could help Fortnite maker Epic remake Apple and Google app stores

Amid Apple’s and Google’s legal battles with Fortnite maker Epic Games over the future of how their app stores work, Arizona legislators advanced proposed rules Wednesday that could upend that debate and change how apps work on iPhones and Android-powered devices.

The state bill, if passed and signed into law, would require app store operators like Apple and Google to loosen their rules around payment processing, an increasingly contentious topic between the tech giants and the large developers that make popular apps on their platforms. 

Instead, Arizona-based companies tallying more than 1 million downloads per year would be allowed to choose alternative payment systems when users sign up for a subscription or buy a digital item like a new look for their character or more tries at a puzzle. Currently, Apple and Google require developers to use their payment processing services, which charge up to 30% commissions, a practice Epic has argued is monopolistic in twin lawsuits filed against the companies.

The new law, which would only apply to companies based in Arizona, still needs to pass Arizona’s state senate and be signed by Gov. Doug Ducey before it would become law. 

The Coalition for App Fairness, which supports the bill, said in a statement that it would “encourage business innovation in Arizona and protect consumer choice” if passed.

Epic didn’t immediately respond to a request for comment. Apple and Google declined to comment. Apple pointed to previous testimony, while Google pointed to its previous statements about how its products help businesses.

Apple has argued that commissions help pay for further development and operation of its app stores and iOS software that powers the iPhone and iPad.

Whether or not the law goes into effect, it’s the latest way states are stepping into policy and legal debates in the tech industry. Rather than wait for federal law or new regulations, states are considering or have passed a growing set of rules around how the tech industry handles privacy, environmental issues and now finance as well. 

Illinois has one of the strictest facial recognition laws in the country and last month contributed to one of the biggest class action settlements in history, with a $650 million payout from Facebook. The state of Washington in 2018 was the first in the nation to pass net neutrality laws, mere months after the Federal Communications Commission struck them down. Massachusetts voters in 2020 passed one of the country’s first right-to-repair laws, forcing car companies to give customers access to vehicle data. And now Arizona is considering its bill as well.

For large tech companies, this represents yet another way they face growing efforts to rein them in. After decades of operating with little oversight, tech companies are being forced to defend their actions — or lack thereof — around how they manage their social networks, control access to their devices or treat competition. And in many cases, these growing calls for tech regulation are something both major parties in the country agree on. President Joe Biden this week even expressed support for unionizing efforts at an Amazon warehouse in Alabama.

“Companies that were once scrappy, underdog startups that challenged the status quo have become the kinds of monopolies we last saw in the era of oil barons and railroad tycoons,” the US House Judiciary Committee wrote in a a scathing, 449-page report last year. “Although these firms have delivered clear benefits to society, the dominance of Amazon, Apple, Facebook, and Google has come at a price.”

It’s also a sign that regardless of legal battles tech companies are fighting over antitrust complaints, the issues themselves won’t be going away when the lawsuits die down.

In Arizona, the bill still has hurdles to negotiate before it becomes law, but lawmakers made clear that more regulation is likely to follow.

“The status quo is failing Arizonans, forcing us to pay inflated prices. It’s failing entrepreneurs, who are being forced to jump through hoops simply to get products to their customers. In fact, the only folks who seem to benefit from this setup are the monopolies – Apple and Google,” Arizona House Reps. Regina Cobb and Leo Biasiucci wrote in an opinion piece published by the Arizona Capitol Times last month. “While D.C. sits on its hands, we are taking action now to challenge Big Tech’s monopoly.”