UK watchdog targets Apple and Google app store fees

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UK watchdog targets app store fees

Highlights

UK Competition and Markets Authority opened a consultation Tuesday on requiring Apple and Google to allow app developers to direct users to alternative payment options.
The new proposals aim to address developer criticism that app store fees, historically up to 30 per cent, limit competition and burden mobile software distribution.
Google reduced Android Play Store fees globally, with UK fees now as low as 10 per cent up to certain thresholds, while Apple argues changes could undermine security.

Consultation on alternative payments

As reported by Financial Times, the Competition and Markets Authority on Tuesday launches a consultation on whether Apple and Google should allow app developers to direct customers to alternative payment options outside their digital storefronts. The regulator says the change could cut app sales fees and strengthen competition in mobile software distribution.

The proposals follow the CMA’s decision last year to designate both companies with strategic market status under the UK competition regime. The regulator has faced criticism from developers, including Epic Games, that earlier action did not go far enough to reduce charges of up to 30 per cent that Apple and Google have historically imposed.

Will Hayter, the CMA’s executive director for digital markets, is expected to say later on Tuesday that developers and users need more choice in how they communicate and transact. He is also expected to say that while Apple and Google should be paid for services they provide, any fees must be justified through an evidence-led framework that reflects both cost and value.

Industry response and market impact

Apple says the CMA’s proposals would undermine App Store security and consumer protection, and warns they could expose users to scams, bait-and-switch tactics and weaker parental controls. The company says it will continue to press its concerns in ongoing talks with the regulator.

Google says it has already reduced Android Play Store fees globally, with changes taking effect in the UK, the U.S. and Europe on Tuesday. Under the new policy, fees fall to as low as 10 per cent up to certain annual earnings thresholds, although transactions completed outside the store can still face charges of up to 20 per cent.

The CMA says it will assess the likely impact of Google’s changes as part of its review. The consultation runs for about a month, and the regulator plans to make a final decision later this year on whether to impose new requirements on the two companies.

In our earlier report on the UK Competition and Markets Authority’s proposals to loosen Apple and Google app store payment restrictions, we explained that developers could be allowed to steer users to alternative payment methods outside the stores. We also noted the CMA’s view that any steering-related fees should be fair and lower than current commissions, and that the regulator is considering requiring Apple to open NFC access to enable more contactless payment competition on iOS.

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