Commentary on Political Economy

Friday 4 February 2022


 Apple avoided the Washington techlash for years. Now it’s at the center of the bull’s eye.

The Senate Judiciary Committee advanced legislation forcing Apple and Google to allow people to download apps outside of their stores

Apple CEO Tim Cook listens as President Biden speaks in 2021. The company is battling an antitrust push in Washington. (Demetrius Freeman/The Washington Post)
By Cat Zakrzewski
February 3 at 8:00 pm Taiwan Time
In 2018, as Facebook faced heat over the Cambridge Analytica data privacy scandal, reporters pressed Apple CEO Tim Cook on how he would deal with the crisis if he were Mark Zuckerberg, the social network’s chief executive.
“I wouldn’t be in this situation,” he replied, during a town hall event hosted by MSNBC.
The comment highlighted the stark distance between Apple and the controversies enveloping its Silicon Valley peers. With a business largely focused on selling phones, computers and tablets, Apple positioned itself as the privacy-friendly tech titan in an industry increasingly fueled by targeted advertising. As social media companies became mired in partisan battles over content moderation, Cook stayed above the fray and was one of the few Silicon Valley CEOs to maintain positive relations with the Trump White House.
[The Cybersecurity 202: Tim Cook's sharp rebuke of 'data industrial complex' draws battle lines in privacy debate]
But in 2022, the most valuable company in U.S. history finds itself in a dramatically different position in Washington as policymakers and regulators have largely shifted their attention to addressing allegations of anti-competitive behavior in the tech industry. As Congress and the Biden administration scrutinize allegations that Apple wields its power as operator of the App Store to the disadvantage of smaller developers, the company’s regulatory threats are piling up.
On Thursday, The Senate Judiciary Committee advanced legislation that would force Apple and Google to allow people to download apps outside of their stores, and allow them to install alternative stores. The bill, called the Open Markets Act, had overwhelming bipartisan support, passing on a 20-to-2 vote.
Last month, the same committee advanced legislation that would ban large tech companies from promoting their own products over those of competitors — which could have a significant impact on Apple’s growing software and services business.
Apple has marshaled the goodwill it built in Washington on privacy and security to bat back the competition push. The company sent a seven-page letter Wednesday to the top lawmakers on the Judiciary Committee, arguing the app store bill would harm consumers’ privacy and security. In the letter, viewed by The Washington Post, the company bashed the data collection practices of “large social media platforms.”
“We are deeply concerned that the legislation, unless amended, would make it easier for big social media platforms to avoid the pro-consumer practices of Apple’s App Store, and allow them to continue business as usual,” wrote Timothy Powderly, senior director of government affairs for the Americas at Apple.
The letter came the same day that Meta, the parent company of Facebook, reported the iPhone maker’s new privacy policies that limit data collection through apps are causing significant head winds for its business. Meta CFO David Wehner estimated on the company’s earnings call that the change could cost the company $10 billion in 2022.
During less than two hours of debate on the legislation, the committee adopted an amendment to address some of the privacy concerns that the tech industry and some members of Congress voiced.
Sens. Dianne Feinstein and Alex Padilla, both California Democrats, raised concerns about the legislation. Feinstein said she worried that the scope of the bill was too limited, targeting only a handful of tech giants. Padilla said he strongly supported the goals of the bill, but warned of unintended consequences on user privacy and hate speech.
But both Democrats ultimately voted to support the legislation. The only dissent in the room came from Sen. John Cornyn (R-Tex.), who argued multiple Senate Judiciary antitrust subcommittee hearings were not enough without a full Judiciary Committee airing. Sen. Thom Tillis (R-N.C.), who voted by proxy, changed his vote to a no following the session, after he was initially recorded as supporting the bill due to a staff error.
Apple’s political fortunes in Washington have deteriorated over the past three years, as lawmakers from both parties have increased their scrutiny of the company. Sen. Elizabeth Warren (D-Mass.) in 2019 told The Post that Apple should be broken up along with Facebook, Google and Amazon, as she sought to make tech companies’ power a key issue in the 2020 presidential primary. That same year, the House Judiciary Committee launched a bipartisan investigation into whether Apple and other tech giants used their broad power to squash competition and hurt consumers. Lawmakers subsequently heard from numerous developers who argued the company’s alleged bullying practices injured their comparatively smaller businesses.
In the fallout of the Jan. 6 attacks, Apple suspended the pro-Trump website from the App Store, due to concerns that it could contribute to violence, and faced backlash from conservatives over the decision.
Apple’s situation has become so dire in Washington that Cook in January became personally involved. He spoke to lawmakers on the committee, including Sen. Amy Klobuchar (D-Minn.) and Sen. Ted Cruz (R-Tex.), to raise concerns about the impact the bills could have on user privacy and security. The company’s proxies in Washington are making similar arguments. The App Association, a coalition of developers funded by Apple and other large companies, sent a letter on Monday to lawmakers warning that the app store legislation would “diminish privacy and security protections.” Adam Kovacevich, the CEO and founder of the Chamber of Progress, an industry coalition which counts Apple as a partner, said in an interview that the current App Store policies allow Apple to curate apps in a way that encourages greater privacy, security and child safety protections.
Sen. Richard Blumenthal (D-Conn.), one of the bipartisan sponsors of the app store legislation, said the bill now includes protections for privacy and against malware.
“These tech giants’ self-serving appeals to privacy and security fall apart on even passing scrutiny,” he said in a statement to The Post. “These companies relentlessly use consumer information to make money, without regard for consumer privacy.”
He noted some security experts have pushed back on these claims. Bruce Schneier, a prominent security technologist, wrote a letter to the Judiciary Committee, calling some of the security concerns raised by Apple and Google “unfounded.” He noted that the bill could lead to the rise of new app stores, that might have stronger security provisions than Apple.
“It’s simply not true that this legislation puts user privacy and security at risk,” he wrote in the Monday letter.
[Apple’s tightly controlled App Store is teeming with scams]
A June 2021 Post review of the App Store found that nearly 2 percent of the 1,000 highest-grossing apps there are scams, costing consumers an estimated $48 million during the time they were available. Apple removed two-thirds of the 18 apps that The Post flagged to the company.
Apple’s regulatory threats aren’t limited to Congress, as it faces litigation from Fortnite maker Epic over its App Store rules. A California judge found that Epic failed to prove its case that Apple is a monopolist, though she did require the company to allow developers to “steer” customers to alternative payment processing services. A bipartisan group of 35 state attorneys general recently filed a brief siding with Epic in its appeal, writing that the company’s conduct “has harmed and is harming mobile app developers and millions of citizens.” The Justice Department also filed a brief siding with neither company that criticized the judge’s ruling for committing “several legal errors that could imperil effective antitrust enforcement, especially in the digital economy.”
Policymakers abroad have also considered similar measures to curtail Apple and Google’s grip on the app stores. South Korean lawmakers last year passed a law to force the companies to offer alternative payment systems on their app stores.
Apple’s opponents celebrated Thursday’s vote to advance similar legislation in the United States as a “historic step” toward restoring competition online.

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