US senators question Apple, Google over app store dominance

Apple Inc. (AAPL.O) and Alphabet Inc.’s (GOOGL.O) Google have come under attack by US senators united from both parties about the dominance of their mobile app stores and whether the companies abuse their power at the expense of smaller competitors.

That came in a Senate hearing on Wednesday which signified the increasing agreement among Democrats, Republicans and smaller companies that the world’s biggest tech firms have become too powerful.

Amy Klobuchar, the top Senate Democrat on antitrust issues, said Apple and Google can use their power to "exclude or suppress apps that compete with their own products" and "charge excessive fees that affect competition."

Several small companies including Tile, Spotify and Match Group criticized the two tech giants over their dominance.

While Tile said Apple boxed out its products and then copied them, Spotify testified Apple blocked it from informing customers that they could find cheaper prices outside its iPhone app and yet Match Group said that it now paid nearly $500 million a year to Apple and Google in app store fees, the company’s single largest expense.

In response to their complaints, representatives for Apple and Google said the companies need to have tight control over their stores and the associated revenue-sharing requirements in order to enforce and pay for security measures aimed at protecting consumers from harmful apps and practices.

They also said they do not copy competitors and that few apps pay their commissions.

However, both Democratic and Republican senators were skeptical of those explanations.

“Google and Apple are here to defend the patently indefensible,” said Senator Richard Blumenthal, a Democrat from Connecticut. “If you presented this fact pattern in a law school antitrust exam, the students would laugh the professor out of the classroom, because it is such an obvious violation of our antitrust laws.”

In addition, explanations from Apple's Chief Compliance Officer Kyle Andeer and Google's Wilson White, senior director for government affairs, as to why the companies' fees do not apply to Uber Technologies Inc, (UBER.N) and apps selling physical goods did not satisfy senators either.

"I feel like unfrozen caveman lawyer," Senator Mike Lee said. "I'm not grasping it."

Meanwhile, Blumenthal expressed concern about a call Match said it received late on Tuesday from its business counterpart at Google.

Match Group said one of its employees received the call from a Google account representative who raised questions about its written testimony.

Match's Chief Legal Officer Jared Sine said Google sought to know why his planned testimony deviated from previous comments the company had made.

"It looks like a threat, it talks like a threat, it's a threat," Blumenthal said of the call, promising to probe Google's action further.

Sine also said Google and Apple both exact an onerous 30% of any digital transaction, causing the prices to increase for consumers.

Match pays around $500 million in fees to the app stores per year, the company's single largest expense, according to Sine.

The testimony came a day after Apple said it would start to sell AirTags - which can be attached to items like car keys to help users find them when they are lost - in direct competition with Tile, which has been selling a similar tracking device for over a decade.

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