While I continue to believe that there was no impropriety called "state aid" in Apple's Irish tax structure, there is a serious issue in the U.S. involving Apple and taxpayers' money that a reader has drawn my attention to:
If there's one thing the federal government didn't envision the Paycheck Protection Program (PPP), an element of the $3.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act stimulus package, to be used for, that would be the world's richest corporation's lobbying activities--especially such lobbying activities that directly run counter to the interests of small businesses.
As Bloomberg revealed yesterday, ACT | The App Association--which claims to represent 5,000 small app developers--receives most of its funding from Apple, and Apple virtually dictates the organization's agenda. In other words, ACT | The App(le) Association is part of the extended workbench of Apple's lobbying department. While claiming to speak for small businesses, it actually advocates Apple positions that are either irrelevant to small app developers (standard-essential patent enforcement) or where Apple and app developers have divergent interests (such as on the infamous app tax).
According to what Bloomberg researched, ACT has a budget of approximately $10 million. It never made sense that those funds would come from 5,000 small app developers: there's no way that small app developers would pay an average of $2K/yr. for a "membership" in a lobbying organization.
Astroturfing is bad enough in its own right. But Apple and ACT added insult to injury at the start of the COVID-19 pandemic when ACT applied for, and received, PPP funding. We're talking about taxpayers' money that was allocated to sustain small businesses--such as the ones suffering now from the effects of Apple's "App Tracking Transparency" program.
On July 16, 2020, ACT's president Morgan Reed published a report, Keep Calm and Carry On: How ACT | The App Association Used Its PPP Funding. It's unbelievable. Let me quote and comment on a few passages.
"ACT | The App Association is a small business with 20 employees in the United States and Belgium and is a 501(c)(6) [non-profit]."
COMMENT: ACT itself may formally be a small non-profit, but Apple is neither small nor a non-profit.
"We also faced a significant revenue loss [...]"
COMMENT: The term "revenue loss" is ridiculous. If they really were an organization representing small app developers, whom they call members, then they wouldn't have "revenues." They'd just receive membership dues, and those wouldn't go down unless many members suddenly left the organization. Of course, Apple sending them money to do work on different issues may technically be "revenue" for ACT.
"In order to be transparent with our members and policymakers, we want to share some of what we used our PPP loan funds for during the last few months."
COMMENT: If not for Bloomberg's top-notch investigative journalism, ACT still wouldn't have been transparent about the one who pays the piper and picks the tune.
"Our members drive everything we do [...]"
COMMENT: Sure, members pay nothing, drive everything, and Apple is even happy to sponsor advocacy efforts that would go against Apple's interests on such issues as the app tax. I wonder what they smoke.
"[...] and our immediate concerns during the start of the [public health emergency] revolved around making sure they [the so-called members] understood the complex and changing-by-the-hour approaches of both the U.S. government and the European Union (EU). [...] We quickly developed a number of resources, such as specialized webpages, webinars, and blogs for our members to navigate application processes [...]"
COMMENT: It appears that virtually no one ever actually made use of those "resources." For instance, ACT links to a "webinar" about COVID-19 and the CARES Act. According to YouTube, however, ACT merely has 20 subscribers (that's just about the size of its own staff at the time; by now they may already have more employees than YouTube scribers), and the CARES webinar they point to has been accessed a total of 13 times (including my own visit to that page) in almost 2 1/2 years (click on the screenshot to enlarge):
That level of following is consistent with pictures that have been shown from ACT events. Also, I attended an ACT event in Berlin three years ago, where I was the only actual app developer in the room. The rest was in-house and outside counsel of the usual suspects (Apple and its allies on standard-essential patent policy).
ACT's report on how it used PPP funds mentions all sorts of topics that sound like they're in the interest of small and large companies alike. But it is well-documented that even during the early stage of the pandemic, ACT engaged in lobbying for Apple on issues where Apple and app developers have completely different interests: app developers want open app markets, they don't want Apple's app review tyranny, and they don't want to be taxed by Apple.
For instance, there's a PDF dated March 7, 2020, related to testimony of ACT's president before the U.S. Senate Judiciary Committee, Subcommittee on Antitrust, Competition Policy and Consumers Rights. The headline mentions "self-preferencing by digital platforms." The key message there is that "Antitrust Concerns Specific to Softawre Platforms are Often Exaggerated and Should be Weighed Against Other Policy Considerations": in other words, move on, nothing to see here, let Apple self-preference with impunity.
Instead of combating self-preferencing by the likes of Apple and Google, Mr. Reed argued that small app developers would benefit from antitrust enforcement is the licensing and enforcement of standard-essential patents (SEPs), specifically mentioning the FTC v. Qualcomm case: but for small app developers, SEPs are simply a non-issue as this blog has explained on various occasions, and they certainly don't care about interdependencies between Qualcomm's two business areas (chipsets and patent licensing). See my April 6 blog post, Despicably deceptive: Big Tech's Save Our Standards campaign [which is essentially another ACT label, created in collaboration with other groups such as CCIA] presents small app developer as victim of standard-essential patent abuse though it NEVER had to license SEPs .
Another example of pro-Apple anti-small-developer lobbying that ACT engaged in shortly after receiving PPP funds is a June 16, 2020 statement by its chairman and founder Mike Sax "on the European Commission’s decision [to] open investigations into Apple’s App Store rules." That statement just touts the "quality, security, and better user experience" of Apple's App Store and warns against "[m]aking exceptions for larger players" (i.e., Spotify). I actually agree on the last point: regulatory and legislative action in this area should be designed to benefit companies of all sizes, and a Lex Spotify wouldn't be in our interest. But ACT said nothing in its statement about real and serious App Store issues that need to be addressed. That shows they never advocated developer interests. They always just try to discourage lawmakers and regulators from taking action against Apple.
It's bad enough that they engage in astoturfing. But using taxpayers' money to support the lobbying efforts of the richest company in the world is insane.
Administrative Law Judge Bryan Moore of the United States International Trade Commission still hasn't ruled on Ericsson's and the ITC staff's motions to compel Apple with respect to its monetary and nonmonetary contributions to, and interactions with, ACT | The App(le) Association--or in case he actually has, the decision hasn't shown up on the electronic docket system yet.
