On Wednesday, the Biden administration argued that Apple and Google’s app store model, including how it requires developers to cut all in-app purchases by 30%, hurts users and developers alike.
That put the White House on the same side as tech CEOs including Mark Zuckerberg, Tim Sweeney and even Elon Musk, who called Apple’s cut a “secret 30% tax on everything you buy through their App Store” amid his spat with Apple CEO Tim Cook late last year. The new report released by the US Department of Commerce found that Musk’s complaints were already resonating in Washington.
Apple and Google have “an important gatekeeper role in controlling (and restricting) how apps are distributed,” the report says, creating a model that fosters “suboptimal competitive conditions.”
The report adds that the policies put in place by Apple and Google “have created unnecessary barriers and costs for app developers, ranging from access fees to functional restrictions that favor some apps over others.”
The Commerce Department recommended that Apple and Google “restrict in-app purchases,” including removing requirements that require developers to use the iOS App Store or Google Play Store for any purchase. Both Apple and Google have an interest in limiting purchases to their app stores: Both take a 30% discount on all transactions made on their app store, whether buying apps, to make in-app purchases or pay for a subscription. Apple even takes a cut when users pay to boost their posts on social media platforms.
The Commerce Department also recommended carriers allow users to install their own apps on their phones and access competing markets.
“The current mobile app ecosystem, and in particular the current App Store model, is detrimental to consumers and app developers,” Alan Davidson, director of the National Telecommunications and Information Administration, told reporters on Wednesday. NTIA) of Commerce.
The NTIA said it developed the report under the direction of Biden’s executive order on competition issued in July 2021, “committing the administration to promoting innovation and competition across the economy.” The Biden administration has previously signaled support for past congressional attempts to regulate app stores.
Neither Apple nor Google immediately responded to Fortune’s request for comment. Both companies told Bloomberg they disagreed with the report’s findings.
“A secret 30% tax on everything”
The 30% cut has long been a thorn in the side of software developers, who say it limits competition and hurts smaller app makers. Both Meta and Microsoft have called for changes to the App Store model. (Apple and Google have reduced fees by 30% for small developers in recent years).
Epic Games, the developer behind the Fortnite video game, accused Apple of engaging in anti-competitive practices in a 2020 lawsuit. The judge presiding over the ruling said Apple must allow developers to connect to payment systems outside of its app store (which would avoid the 30% fee), but did not declare Apple a monopoly.
Meta CEO Mark Zuckerberg also criticized the iPhone maker’s policy. “Apple has kind of distinguished itself as the only company that tries to unilaterally control what apps get on a device,” Zuckerberg said during a New York Times conference in November. “I don’t think it’s a sustainable or nice place to live.”
Even Twitter CEO Elon Musk complained about Apple’s policies in the days leading up to the launch of paid verification service Twitter Blue.
Did you know Apple puts a secret 30% tax on everything you buy through their App Store? https://t.co/LGkPZ4EYcz
— Elon Musk (@elonmusk) November 28, 2022
Twitter Blue normally costs $8 per month, but users trying to purchase the subscription through Apple’s or Google’s app stores must pay $11 insteadto account for the 30% commission.
This story was originally featured on Fortune.com
More Fortune:
Olympic legend Usain Bolt has lost $12 million in savings to a scam. Only $12,000 left in his account
Meghan Markle’s real sin that the British public can’t forgive and Americans can’t understand
‘It just doesn’t work.’ World’s best restaurant closes as owner calls modern dining model ‘unsustainable’
Bob Iger just put his foot down and told Disney employees to come back to the office