David Heinemeier Hansson

January 19, 2022

Apple turns the legislative contempt up to 11

In North Dakota, Apple sent Erik Neuenschwander, a chief privacy engineer, to make its case that opening up the App Store to free and fair competition on payment processing would be bad for privacy. He focused in a relatively sober tone on the sanctity of Apple's integration and curation as arguments for why they deserved their monopoly privileges. A technical witness perhaps stretching the truth to fit the narrative needed, but at least feeling somewhat constrained by it.

In Arizona, Apple sent Kyle Andeer, the Chief Compliance Offer, to claim that preventing Apple from shaking down app developers for 30% would be tantamount to "a government mandate that Apple give away the App Store" because it would "allow billion-dollar developers to take all of the App Store’s value for free". This was a considerably more spurious line of arguments than Neuenschwander had advanced in North Dakota, but, still, at least it stuck to arguing the economics of the situation, no matter how corrupt.

Now that Apple is facing a concrete antitrust bill in Congress, they've sent their biggest baller of bullshit yet to dribble with the legislature. In a letter to the Senate Justice Committee, Timothy Powderly, Apple's senior director of government affairs, sent this cross-court shoot to oppose sensible regulation:

If Apple is forced to enable sideloading, millions of Americans will likely suffer malware attacks on their phones that would otherwise have been stopped.

Millions of Americans are going to be subject to malware if the iPhone must work like the Mac? Allowing the buyers of thousand-dollar smartphones to install the software of their choice, like they do on their laptop and desktop computers, would be a novel catastrophe of computing? That's just preposterous hyperbole.

It's clear that as Apple has progressed from offering testimony provided by first someone technical, then by someone on policy, and finally by a unapologetically political beast, the nonsense has escalated to embarrassing, insulting levels.

This seems to be a conscious escalation in line with the way Apple is making a mockery of the South Korean government and the Dutch competition authorities. Both of which passed laws and rendered judgement on the question of whether Apple was entitled to force developers to hand over 30% of their revenue to the company on digital transactions.

Apple, along with Google, has gambled that by technically allowing developers to charge a credit card through a different processor, but retaining the right to extract their obscene cut and eviction privileges under new names, they'll be in compliance with the letter of the law, even as they violate its spirit and intention.

Take this story on Apple's response to the Dutch competition authorities by whom they were handed a clear if narrow demand: No more forcing dating app developers to pay your obscene take! To which Apple responded, like Google in South Korea, that sure, they'll allow such apps to run transactions through their own payment processor, but it'll still be through Apple's APIs so they can monitor all payment flows, and they'll just take their cut as a "platform fee" instead of a "payment fee". Rendering the entire exercise to allow developers competitive options moot, and making a fool out of the Dutch.

It's a clear sign that monopoly power has metastasized when it feels this confident in its ability to mock and embarrass the democratic institutions that it in theory must answer to. The practice of trillion-dollar might is that it'll yield political rights too. Which of course is the classical warning about letting monopoly power grow unchecked: Eventually it's not just about the capture of economics, but soon too the capture of politics.

And for every state senate Apple and Google is able to bully into submission, like they did in North Dakota and Arizona, their sense of invulnerability will grow. Of course they'll continue to think they're above the law when the legislatures keep backing down when the lobbyists swarm town.

As with oil, railroads, trusts, and telecoms, the fight against monopoly capture is the fight against a many-headed hydra. Even if you cut off one head with a new law, it might well grow back two heads of new transgressions. That's what we've seen so far in South Korea and The Netherlands. Developers extraordinarily end up worse than were they were, if they try to take advantage of the statutory relief they were granted by lawmakers and regulators.

But as with any video game, when the bosses get harder, it means you're closer to the end. Keep fighting, keep lawmaking, keep regulating. The level of contempt is darkest before the dawn. And the dawn will come.

About David Heinemeier Hansson

Made Basecamp and HEY for the underdogs as co-owner and CTO of 37signals. Created Ruby on Rails. Wrote REWORK, It Doesn't Have to Be Crazy at Work, and REMOTE. Won at Le Mans as a racing driver. Fought the big tech monopolies as an antitrust advocate. Invested in Danish startups.