The threat of regulation has been looming over big tech giants such as Apple Inc. (AAPL) and Alphabet Inc. (GOOGL) over the past three years. With a bill seeking broader changes in the way Apple and Google operate their respective app stores introduced this week, Loup Funds Managing Partner Gene Munster offered his take on what is in store for these companies.

What the New Legislation Is All About

The changes proposed by the legislation calls for allowing third-party app stores with the App Store and Google Play store, Munster noted. Both companies are also called to allow app developers to explicitly advertise within apps, so that consumers can subscribe and make purchases outside of the App Store or the Google Play Store, he added.

This will help avoiding the 30% take rate on in-app purchases, the analyst said. The proposed bill will have to be approved by the House and Senate before becoming law, Munster said.

Regulation Not Automatically Negative

The end result of regulation is not automatically negative for big tech, given unintended consequences often occur when incentives change, Munster said. Even if Apple buckles under pressure and reduces its take rate from 30% to 10% – a possibility which is unlikely – it could still make more money ultimately, the analyst said. A reduction in fees will likely spur greater growth in the app development ecosystem, he added.

Apple and Google, according to the analyst, have the stronger case, given they created their mobile app stores and are responsible for maintaining them, the analyst said. They, therefore, should have control over how things are curated and distributed within the stores, he added.

Additionally, opening the iPhone to third-party app stores, the analyst said, will weaken security and privacy, thereby harming consumers.

Munster's Take On Potential Regulation

The likelihood of radical regulation is low, Munster said. If any regulations do materialize, the most likely outcome is that Apple and Google will be forced to remove their anti-steering clauses, thereby allowing publishers to advertise payment options outside of the default in-app payment systems, the analyst said.

"This would have limited impact on consumer app store engagement given the easiest way to manage app spending will be to remain inside the respective walled gardens," the analyst concluded.

Price Action

Apple closed Friday's session down 0.14% at $149.10 and Google ended nearly flat at $2,768.12.