Future Tense

A Tech Lobbying Group Is Trying to Terrify Parents

A small child sits under a stool, face hidden, as they play with a smartphone.
charlesdeluvio/Unsplash

The opening is standard for political advertising. A husband and wife sit at a kitchen table. The woman laments that a child spend hundreds of dollars on “battleskins,” objects purchased within a game to create a different appearance. “It used to be that parents had to approve their kids’ in-app purchases. Then the government got involved.” Exasperated, “This is how you help me? By making it harder to control my kids in app purchases? Do me a favor, Congress, leave my phone alone.” It ends: “Call your congressmen and tell them to vote no on S2710.”

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S2710, the bill the ad is targeting, is the Open App Markets Act. The advertisement preys on the familiar fear that government regulation will result in consumers getting worse service, losing control of their data, and even being hit with massive bills when their kid goes on a spending binge. But the premise of the ad is a lie. The bill doesn’t impact consumers at all; the bill only puts controls on big tech companies (Apple and Google) to stop them from engaging in a series of predatory practices which exploit smaller tech companies (like startup app developers independent of the big tech companies).

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Basically, the ad is trying to outrage consumers so that they will call their representatives on behalf of Apple and Google, by misleading those consumers about what the bill does.

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The ad was made by NetChoice, which is a group that wants to “make the Internet safe for free enterprise and free expression.” NetChoice is a lobbying group and trade association; Google Meta, TikTok, and many other major tech companies are members. The earlier version of the video, on NetChoice’s YouTube page, is identical except for targeting a similar bill, S2992, the American Innovation and Choice Online Act.

Kids making in-game purchases (usually on mobile games) tied directly to parents’ accounts is a problem. There have been news stories about kids spending hundreds or even thousands of dollars without their parents’ knowledge. In 2020, a woman reported that her son made $16,000 worth of in-app purchases; Apple’s coverage of the story emphasized the parental control options on the Apple AppStore. there is evidence that mobile games, in particular, use various in-game purchase products to target kids and may make them susceptible to gambling addiction. These are reasonable concerns. The problem is that they’re not related to the Open App Markets App.

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The Open App Markets App that would impose antitrust restrictions on app-stores and was authored by Sen Blumenthal (D-Connecticut) and has broad bipartisan support

The bill’s cosponsors run the ideological gamut from Democrats Elizabeth Warren and Dick Durbin and Amy Klobuchar (who introduced S2992, which would impose restrictions on a different set of companies) to Republicans Josh Hawley and Lindsey Graham. The bill currently sits before the Judiciary Committee, headed by Durbin. Because the bill has support from the far-right wing of the committee (Graham is the second ranking member and he’s recruited aggressively to support the bill), it’s likely to pass easily, even if more tech-company friendly senators on the committee like Dianne Feinstein choose to oppose it.

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The kitchen-table ad’s goal is to create a public sense that the bill will result in a serious problem, kids buying battleskins and loot-boxes without parents’ approval. But this problem already exists; parents’ methods of payment are connected to their children’s phones, often without clear safeguards or separation in accounts. This problem can be solved within the app-stores, and those solutions are independent of the bill. NetChoice is running ads opposing both the Open App Markets App and the American Innovation and Choice Online Act through their website; whether there is any private lobbying going on in these cases is difficult to say, because private lobbying is still opaque.

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But before we can talk about what the bill actually does, we have to look at how the app-buying ecosystem works.

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The state of app-stores is incredibly simple: There are two. The Apple AppStore and the GooglePlay app store control the vast majority of the market (some estimates have them over 99 percent). This isn’t surprising. If you have an Apple device, then the Apple AppStore is literally the only place you can download apps. If you have an Android phone, then the Google AppStore is the dominant force. Yes, in theory you could use a different AppStore, but it’s far more likely that Google will have the applications you’re looking for at the price. So basically, there are only two games in town, and consumers cannot actually choose between the two freely, because the choice of which to use is dictated by the platform of the phone.

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Apple and Google have used their control of the marketplace to engage in anti-competitive business practices. These practices include “self-preferencing,” or using their search algorithms to drive consumers towards the products that they make and away from competitors and charging exorbitant commissions on both the initial purchase of the app and any in-app purchases. The app stores have a captive market. I if an app wants to sell to Apple users, then it must use the Apple AppStore. GooglePlay doesn’t have actual control over what the devices could download—one technically could develop for the Android platform and sell through a different app store. But Google dominates the market so substantially that almost all purchases of apps for android devices are through GooglePlay. If an app developed for Android wants to reach consumers, it has to be in GooglePlay.

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Apple and Google have a divided duopoly; they each have monopolies over their own divided chunks of the market place. The Open App Markets Act isn’t even an attempt to break that duopoly; it’s just an attempt to set basic requirements prohibiting Apple and Google from doing certain exploitative things with their market control. It would prohibit app stores from requiring that apps in the store use the app store’s payment processing system, requiring apps to offer better prices in their app store than on other platforms, punishing app developers for their use of different pricing structures, and prohibits app stores from interfering with the communication between the app developers and users.

The advertising campaign is somewhere between misleading and lying. The bill doesn’t change restrictions on parental approval for in-app purchases at all; it prevents the app stores from demanding the apps use their payment systems. Google and Apple could argue that their app stores are the only ones that have the parental controls available, but the bill doesn’t stop Google and Apple from requiring that those parental controls get implemented in all of their applications. Parental controls over payment just aren’t implicated.

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This is an old strategy in political advertising. Trade groups insist that a law is going to harm consumers to get consumers to call their representatives in opposition, even when the bill doesn’t impact consumer protections. In this case, it just stops app stores from exploiting app developers through the established duopoly.

The people behind the political campaign against the Open App Markets App know this, but they also know that the actual scope of the bill is not going to compel anyone to act. “We really think Apple and Google should be able to require all the apps in their store to use their payment system and charge commissions as high as they want” isn’t going to motivate consumers. Nor does “We don’t want the government involved in exchanges between app stores and app developers,” because most people aren’t app stores or developers. But scaring parents about unexpected bills for battleskins? That’s motivating.

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Even a decade ago, NetChoice might not have had to worry about the Open App Markets App. The Republican Party’s aversion to regulation used to be a good talking point for big companies that wanted to keep control of their industries. But many Senate Republicans, including major players in the caucus like Grassley (the committee’s ranking GOP member) and Graham, aren’t buying that move from the big tech companies. Some senators (like Hawley) are skeptics of old school free-market doctrines outright, while others are generally opposed to market regulation but making an exception to regulate the major tech players.

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Democrats’ long-standing support for regulation and this shift in the Republican Party means that the Open App Markets App and other regulations are likely to have strong political support. The Open App Markets App is a moderate, mild set of regulations; more radical bills have been put forward by, including outright breaking-up major technology companies. It’s a reasonable proposal that ideologically diverse members of congress are willing to support. It’s worrying that a trade group which counts Google, PayPal, TikTok, and Meta among its members is using parents’ fears about their kids’ in-app transactions as a scare tactic to motivate a call-campaign.

Future Tense is a partnership of Slate, New America, and Arizona State University that examines emerging technologies, public policy, and society.

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