David Heinemeier Hansson

March 4, 2021

The Arizona House stands up to Apple and Google

It passed! It fricken passed. I could barely contain my excitement when I saw the tweet from Matt Stoller that the Arizona House passed HB2005. This is the anti-monopoly bill that will prevent Apple and Google from using their gatekeeper role in mobile to force developers to use their exorbitantly-priced payment processing, and stop them from retaliating against those who don't. The one I testified in favor of just two weeks ago.

The passing of this bill represents the most important victory for big tech antitrust in twenty years. Even though it's not a done deal, since it still has to clear the senate and the governor, the momentum Arizona State Representative Regina Cobb has brought to the fight with her bill completely changed the dynamic. I won't rehash all the particulars, because Matt Stoller did an excellent job doing just that in his must-read newsletter BIG. Go ahead and read his full piece to get up to speed: Apple Threatens North Dakota, Suffers Crushing Loss in Arizona.

Instead, let's talk a little about the reaction to this upset win. Literally the very first comment on The Verge's story on the victory:
internet comment warning apple will cut off arizona.png

That's a pretty common sentiment. People assuming that these big tech companies are now so powerful that they don't have to abide by state laws any more. Instead, they can just retaliate against states by pulling their essential platforms. And it's not an irrational fear either, given Facebook's retaliation against Australia. But I think the comparison is overstated.

Apple is an American company. Arizona is the 14th most populous state in the union. Not only would the optics be catastrophic for Apple, so too would the poisoning of consumer trust. There are over seven million people in Arizona. Are they really going to take kindly to the idea that laws enacted by their elected officials would be met with such a punitive response? By America's most valuable company?

It also ignores the federal political climate. The House Antitrust Subcommittee just issued their scathing report a few months ago, now the committee is working on remedies, and there's good bipartisan support to move forward. The stakes for that process are incredibly high for big tech. Breaking them up is a mainstream idea with supporters on both sides. Would Apple really be so brazen as to tempt the most severe injunction, just such that they could save the 30% skim?

It's not like I think Apple is just going to accept this victory yet, though. They're going to fight tooth, nail, and dirty to kill this bill in Arizona. They must be pouring in millions to lobby senators. I saw they had hired the former chief of staff of the governor. They're going to throw all their might and weight at this.

But let's say they somehow turn around the momentum in Arizona. The courage shown by Cobb has already spread. There are an ever-growing list of states lining up behind the same obvious conclusion: Apple and Google shouldn't be able to put a 30% tax on the digital economy! And the long-term odds just aren't that great to maintain this regime. Apple has to win potentially fifty times, if all fifty states eventually take a swing at this, whereas app developers just need to win one state to crack the dam.

We're not there yet, but my money's on Apple eventually deciding that this is not a fight worth the damage to their brand, to their political standing, to their relationship with developers, or their other causes. Whereas Apple used to be able to largely dodge out of the Big Bad Tech conversation, they're now smack in the thick of it. That's gotta sting. Apple in the same basket with Facebook, Google, and Amazon. I don't think Apple thinks of themselves as happy peers in that group.

It's never too late to turn the ship around, Captain Cook! 😄

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.