The case against the Open App Markets Act (OAMA) and American Innovation and Choice Act (AICOA) continues to build as conflicts emerge between those bills and the Federal Trade Commission’s (FTC’s) “click to cancel” rule. This awkwardness is just the latest example of how AICOA and OAMA would gut private sector and government consumer protection efforts.
The “click to cancel” proposal—also referred to as the “negative option” rule—has some problems. In the process of seeking to eliminate unfair or deceptive practices that make it hard for people to cancel subscriptions, the proposal goes too far in trying to design communications interfaces between companies and consumers. However, the goal is desirable, especially for those of us who’ve had frustrating experiences trying to cancel a free-to-pay conversion or subscription. It makes intuitive sense that if an app or publication enables you to sign up with a single click, you should be able to cancel just as easily. The good news is that software platforms are enabling this in a much better way than government lawyers could via one-size-fits-all mandates like the negative option proposal. The market has already invented and is continually improving the wheels the FTC has only blueprinted. But if OAMA or AICOA are enacted, the current offerings would be presumptively illegal. That would create some obvious problems with the click to cancel options consumers currently rely on and some important, related conveniences for consumers as well.
One of the major purposes of OAMA is to ban Apple and Google from bundling payment processing together with app distribution. AICOA would also presumptively ban the arrangement by prohibiting preferential treatment for platform-owned payment processing options. Some of the largest developers on the platform seek this legislative solution to avoid having to pay for distribution on the app stores. If they can use a third-party payment processor, chances are they could find one that is unwilling to transmit the commission they owe to the app stores. Their problem would be at least partially solved. But one of the victims of a mandate to unbundle payment processing and distribution would be consumers’ current ability to cancel (or manage) any of the subscriptions they have through their smart devices. Relatedly, parents can easily contest and refund purchases their kids make on separate devices through parental controls. By bundling distribution with payment processing, software marketplaces get to provide a product for consumers that minimizes confusion and enhances convenience across all the apps and services with which they engage. App companies in turn benefit from a distribution option with a reputation for quality and a built-in propensity for consumers to pay for their offerings. The platform-level payment and subscription options reduce the risk consumers face when deciding to experiment with a new app and that helps smaller app companies succeed.
The dashboard-style presentation and parental control capabilities the platforms provide may very well be the kinds of consumer-first interfaces the FTC has in mind with “click to cancel.” In fact, they do more than what is envisioned with the proposed rule and in a more user-friendly and responsive way than a federal rule would allow. Congress’ and the FTC’s job is to ensure competition creates options like these. So, it is ironic that with AICOA and OAMA, we couldn’t have nice things like this. Government intervention would beget further intervention to rectify the resulting inability to use platform subscription management options. The best we could hope for is “click to cancel” wrapped in red tape and delivered at the speed and dexterity of government.