Google to open up app payments after UK watchdog probe

Google has agreed to allow developers to offer alternative payment options in its app store following a probe by the UK’s competition watchdog over the tech giant’s dominance.

The Competition and Markets Authority on Wednesday said Google had pledged to allow app developers the freedom to break away from its Google Play billing system in the UK and use alternatives to process payments in the app, in a move long resisted by the big tech group.

The draft commitments come after the CMA launched enforcement action against the search engine company last year for potential breaches of competition law by forcing app developers to use Google Play’s payment system to process in-app purchases.

The regulator will now consult on whether to accept Google’s proposals as a resolution to its probe, and has set a deadline of May 19 for feedback.

“While we’re pleased our investigation has resulted in Google offering to give in-app payment freedom to thousands of app developers, we need to make sure these commitments will work in practice,” said Ann Pope, senior director of antitrust at the CMA.

Both Google and Apple have come under scrutiny from antitrust regulators around the world concerning their alleged stranglehold over the app market.

The rules governing in-app payments, and the fees charged by both Apple and Google on their respective app stores, have led to a fierce backlash from developers.

Google made similar changes last year for European users in anticipation of tough new laws in Brussels to curb the dominance of big tech companies. Google allowed non-gaming apps to provide alternative billing systems for in-app purchases for customers in the European Economic Area from July 2022.

The CMA is also investigating Apple over its own app-store rules, including a 30 per cent commission the company takes on digital purchases. It has faced sustained criticism and legal challenges from app developers, including Fortnite maker Epic Games and music service Spotify.

On Wednesday, Google said if its measures were accepted by the CMA, developers would be able to add an alternative in-app billing system, alongside Google’s existing one, for UK users.

The changes will be rolled out to all apps by October. It will be offered first to developers of non-gaming apps, initially excluding one of the largest and most profitable genres.

Google said developers could also choose not to offer Google’s billing system at all for users in the UK.

When a user selects alternative billing, the developer’s service fee will be reduced by 4 per cent. If the developer does not offer Google’s billing system as an option, the service fee will be reduced by 3 per cent.

“These options will be presented in a neutral manner allowing users to make an informed and engaged choice,” Google said.

In its year-long market study into Apple and Google’s mobile ecosystems published last year, the CMA found Google Play accounted for 30-40 per cent of all net revenue generated by UK consumers using in-app payment systems.

Google’s Play Store rules previously required app developers to use its internal payment system for in-app purchases. In 2021, Google halved its fees for all subscriptions and in-app purchases to a maximum of 15 per cent.

Once larger apps surpass $1mn in revenue, Google charges a 30 per cent fee on in-app purchases. Apple follows a similar model on its app store.

In February, the EU said it would narrow the focus of a long-running probe into Apple to how it restricts apps from telling users about alternative, and potentially cheaper, subscription options. This meant it abandoned a separate charge that accused Apple of forcing developers to use its own in-app payment system.