Last month, a lobbyist approached Kyle Davison, a senator from the state of North Dakota, with an unusual proposal: a law to prevent Apple and Google from forcing companies in the state to hand over part of their app sales.
Mr. Davison, a Republican, focused on bills related to a $ 200,000 literacy program and birth records for homeless people. But he was intrigued by the lobbyist’s arguments that the tech giants were hurting small businesses and thought that such a law could attract technology companies to North Dakota. Then he introduced him.
“She told me it could be great. But for me, that means the local newspaper will come with a camera, ”said Davison, 60. “I wouldn’t be sincere if I said I expected the reaction.”
At the Capitol in Bismarck, a 21-story Art Deco tower that is the tallest building in the state, an audience on the project drew Washington lawyers, North Dakota newspapers and Silicon Valley executives. Joining Apple and Google were Americans for Prosperity, the conservative group founded by the Koch family. On the other side was the Fargo Chamber of Commerce. Someone called from Alaska.
Proponents of the project said it would help smaller companies and only hurt Apple and Google’s revenues. Apple’s chief privacy engineer, Erik Neuenschwander, testified that the bill “threatens to destroy the iPhone as you know it”.
North Dakota is part of a new front in the battle for Big Tech and its power. Frustrated by the lack of action by courts, regulators and Congress, rivals and technology critics are turning their attention to state legislatures, promoting bills that seek to tax the biggest technology companies, control their power and limit their control over the Internet.
New York is considering a bill that would make it easier for the state to prosecute antitrust cases against major technology companies. Florida lawmakers this month proposed measures, supported by the governor, that would limit how social media companies could police the content of their websites. And on Friday, Maryland enacted a law that will tax online ads sold by companies like Facebook, Google and Amazon. Connecticut and Indiana are looking for similar projects.
State struggles pose a thorny problem for technology companies, whose legions of lawyers and lobbyists are trained to extinguish threats in Washington and in the courts. The 50 state legislatures are diverse and unpredictable, with Republicans and Democrats lining up against Big Tech.
The North Dakota bill focuses on Apple and Google’s practices of getting a cut of up to 30 percent on sales of many smartphone apps, a policy that earned companies $ 33 billion last year, according to with estimates from Sensor Tower, an application data company.
Some smaller companies have argued that Apple and Google force app makers to pay an artificially high fee just because of their absolute dominance. Both companies’ software supports almost all smartphones in the world.
The bill would prohibit Apple and Google from requiring applications to use their payment systems, allowing them to receive their commissions.
It would also require Apple and Google to allow smartphone users to download applications from outside their main app stores, although Davison said he was trying to remove that provision to alleviate some of his colleagues’ concerns. Google already allows these downloads, but Apple does not.
The 47 North Dakota senators are expected to vote on the measure this week after the debate began on Monday. The schedule is accelerated because the legislature meets for only 80 days every two years. If the majority vote yes, the bill goes to the Chamber.
If the project fails, the struggle of Apple and Google will seem far from over. Legislators in Georgia and Arizona are considering nearly identical legislation for app stores, and Andy Vargas, a state representative in Massachusetts, said he planned to present a comparable bill this week. Lobbyists said they were also pushing for app store accounts in Wisconsin and Minnesota.
An Apple spokeswoman said most iPhone apps are free and pay no commission. She added that most North Dakota companies that shared revenue with Apple earned less than $ 1 million a year from their applications, which means that they pay Apple 15% of some sales, instead of 30%. Apple reduced its fee for smaller companies last year amid an analysis of App Store policies.
Google did not respond to a request for comment.
Davison said he received the bill from Lacee Bjork Anderson, a lobbyist for Odney Public Affairs in Bismarck. Anderson said in an interview that he was hired by Epic Games, maker of the popular Fortnite game and a plaintiff in lawsuits against Apple and Google because of its application policies. She said she was also being paid by Coalition for App Fairness, a group of companies, including Epic, Spotify and Match Group, which has protested app fees and is leading the push for app-store accounts.
“Look, we are a very conservative state,” said Anderson, a Republican. “But we are also a state where Teddy Roosevelt came from, and there is no greater defender of confidence.” (Roosevelt, the former president, was born in New York, but later owned a ranch in North Dakota.)
Still, she admitted that the bill may not have enough votes to pass, which she attributed to confusion among some senators and Apple’s aggressive lobbying.
“They are making calls to Zoom with all the senators,” she said. “It doesn’t necessarily work well here – having California executives or lobbyists trying to tell people what to do.”
State Senator Jerry Klein, the Republican who heads the committee that handled the bill, agrees that Apple’s presence is being felt at the state assembly. He said he opposed the legislation in large part because Apple and its lobbyists warned that the bill could put North Dakota residents at risk of cyber attacks and subject North Dakota to costly lawsuits. He also feared that interfering in an agreement between two private companies would be bad for business.
Mr. Klein, 69, a retired grocery store owner for little Fessenden, said that some of his colleagues were also concerned about passing a law focused on “digital app delivery platforms” and “in-app payment systems” when they fought to understand the effects.
“All people here know is that they have their phones connected, they have power, they can take pictures and show pictures of their grandchildren,” he said. “It goes beyond some of us.”
Even so, some application manufacturers rely heavily on legislation. David Heinemeier Hansson, a Danish technology entrepreneur who struggled to avoid Apple’s fees with his email application, Hey, said the project could be a significant blow to Apple’s policies, although it applies only to Dakota companies From north.
He said that if the project passed, he was prepared to open offices in North Dakota. And he predicted that if moving there meant avoiding paying Apple 30% of sales, many other companies would join him.
“You don’t have to be such a big software company for 30% of your revenue to be your biggest line item,” he said. He added that he had never been to North Dakota, where the temperature the other day dropped to minus 18 degrees Fahrenheit, “but I hear it’s adorable.”
Heinemeier Hansson said he was not banking on North Dakota’s adoption of the law, but said that the fact that the bill is getting attention and getting a vote would encourage other states to consider similar measures.
“That’s why Apple came up with the big scary picture that it would end the iPhone as we know it,” he said. “Of course, I wouldn’t end up with the iPhone as we know it, if it were approved in North Dakota. They are afraid that, whatever state opens the floodgates first, the floodgates will be opened ”.