Fortnite Row Aftermath: Arizona House Passes Bill That Will Require Apple, Google To Let App Developers Chose Outside Payments Systems

The Arizona House of Representatives has voted to pass landmark legislation that will prevent operators of app stores from forcing app developers to use a particular in-app payment system as the exclusive mode of payment.

The bill could have far-reaching consequences for app store operators such as Apple Inc. AAPL and Alphabet Inc. GOOG GOOGL as it will enable app developers to avoid paying fees ranging from 15% to 30% charged by the two tech giants.

What Happened: The Arizona House of Representatives passed an amendment to the existing bill, HB 2005, in a 31-29 vote on Wednesday. The bill prevents operators of app stores with over a million downloads per year from forcing app developers domiciled in the state to use a particular in-app payment system as the exclusive mode of payment. The app store operators will now be required to offer alternative payment processors to app developers.

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For the legislation to become law, it still needs to be passed by the Arizona Senate before being sent to Arizona Governor Doug Ducey. The legislation would apply to companies and users in Arizona.

Why It Matters: The passage of the legislation marks a setback for Apple and Google as it will enable app developers to avoid paying fees to the tech giants on in-app purchases and app sales. Purchases made through Apple’s App Store and the Google Play app store earn the technology firms a 30% cut.

It also comes amid the ongoing legal battle between Epic Games Inc. against both Apple and Google over the removal of Epic’s “Fortnite” game last summer from the app stores run by the two tech giants. Epic has deemed the 30% cut that Apple takes on in-app payments as “unjust”.

See Also: Apple Holds ‘Crazy, Misguided View’ About Owning All Commerce related to iPhone, Says Epic Founder

Apple has been facing several allegations surrounding its app store policies, including fees for digital purchases. In August last year, Microsoft Corp. MSFT criticized Apple’s anticompetitive App Store policies, which led to the shelving of its xCloud game streaming service.

Price Movement: Apple shares closed almost 2.5% lower on Wednesday at $122.06 and further declined 0.3% in the after-hours session. Alphabet closed almost 2.4% lower on Wednesday at $2,026.71 and further lost 0.3% in the after-hours session.