The Biden administration is moving to slash billions in credit card late fees and calling on Congress to open up mobile app stores to greater competition, alleging that Apple Inc. and Alphabet Inc. act as gatekeepers in ways that harm consumers and inflate prices.
(Bloomberg) — The Biden administration is moving to slash billions in credit card late fees and calling on Congress to open up mobile app stores to greater competition, alleging that Apple Inc. and Alphabet Inc. act as gatekeepers in ways that harm consumers and inflate prices.
President Joe Biden will announce the measures at a meeting Wednesday of his “competition council,” a group of cabinet officials and top aides assembled to ease the grip of corporate consolidation in key industries.
The Consumer Financial Protection Bureau will formally propose a rule to cap late payment credit card fees at $8, from an average now of roughly $30, and estimates the move will save consumers a total of $9 billion a year. The fees are applied to payments made even a few hours late and appear to be a source of profit rather than cost recovery, White House officials told reporters.
“At the end of the day, we want to see a marketplace where Americans are treated fairly, prices and risks are clear upfront and where companies compete hard to win their customers’ business,” said CFPB Director Rohit Chopra said.
The rule could go into effect in 2024 after a comment period and finalization, he added.
Biden will also call on Congress to pass a law regarding consumer fees, or so-called junk fees, in four categories: Online ticket sales for concerts and sporting events, airline seat fees for families who want to sit together, excessive termination fees for internet, telephone and television services and surprise resort fees.
“These fees can be incredibly frustrating,” National Economic Council Director Brian Deese said. “They cost consumers billions of dollars a year, they make it harder for people to comparison shop but they also reduce competition.”
In a separate report set for release Wednesday by a Department of Commerce branch, regulators concluded that Google and Apple have created overly burdensome rules for app developers, making it harder for them to reach consumers. Apple’s iOS and Google’s Android smartphone operating systems run on more than 99% of mobile phones in the US and globally.
In a July 2021 executive order, the president asked the National Telecommunications and Information Administration to study the mobile app market. The agency said it had received more than 150 public comments as part of its study, including from tech platforms like Apple and Meta Platforms Inc.
Apple and Google’s “practices and policies hinder a competitive app ecosystem,” NTIA head Alan Davidson told reporters. “The current mobile app ecosystem, and especially the current app store model, is harmful to consumers and to app developers.”
The report urged lawmakers to pass legislation that would make it easier for consumers to change the default apps on mobile phones and tablets and allow for direct downloading of apps or third-party app stores. Congress should also consider allowing developers to use payment methods other than the ones provided by Apple and Google, which often take a 15% to 30% cut on digital sales, according to another recommendation in the report.
The recommendations mirror legislation introduced in the last Congress. The Open App Markets Act would require Apple and Google — whose Google Play is the most popular app store on Android mobile phones — to make it easier for users to download other app stores and switch the apps set as the defaults on phones.
While a Senate panel advanced the bill, the full chamber failed to consider the legislation. The Justice Department opened a probe into Apple over its app store policies during the Trump administration, an investigation that has continued under Biden.
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