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Apple Comes Under Scrutiny Over App Store Policies Limiting Blockchain and NFT Innovation

Apple has come under the spotlight over its App Store policies and potential constraints on emerging technologies.

On Friday, July 28, two lawmakers, Rep. Gus Bilirakis from Florida and Rep. Jan Schakowsky from Illinois, sent a bipartisan letter to Apple CEO Tim Cook expressing concerns about Apple’s App Store policies and how they may be restricting the growth of emerging technologies like blockchains, NFTs, and other distributed ledger technologies.

In the letter, the two, who are also high-ranking members of the Innovation, Data, and Commerce Subcommittee, sought information and documents from Apple to better understand the impact of these policies on American technological leadership.

This letter follows a previous inquiry from the lawmakers to Apple in November 2022, which focused on security vulnerabilities and foreign surveillance related to Chinese-originating apps, including TikTok. Although Apple has previously argued that its strict guidelines enhance security, lawmakers were concerned that these rules might be used to stifle competition and innovation.

While Apple has argued these limitations increase security by creating a walled garden, many are concerned that Apple has used the app store as a weapon against competitors,” the two lawmakers said in a joint note. “It is essential that Congress fully understand the App Store Guidelines and the extent to which these guidelines limit innovation and impact American technological leadership.  

However, the concerns raised in the letter specifically targeted instances where Apple’s policies have allegedly hindered blockchain and NFT-related apps from fully utilizing their potential.

“It appears that Apple has used its App Store guidelines to increase its own profits and reduce the utility of apps in blockchains, NFTs, and other blockchain-related technology,” read the letter.

Notably, last December, Coinbase accused Apple of demanding a 30% cut of gas fees associated with NFT transfers, claiming that such a requirement was not feasible within Apple’s in-app purchase system. Companies like Axie Infinity also faced challenges obtaining App Store approval for their blockchain-based apps, leading them to release limited versions that excluded core NFT mechanics.

To clarify these matters, the two lawmakers requested information from Apple about its app review processes, vetting of foreign ownership, and the potential for using the “secure element” in smartphones to support blockchain innovation and user data security.

That said, the lawmakers outlined eighteen questions they want to be answered by the technology company, including whether it plans to build apps using blockchain or related technologies, its app review processes and in-app purchase policies, among others. Apple is expected to respond by August 14th, 2023.

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