Google to open app payments after UK watchdog investigation

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Google has agreed to allow developers to offer alternative payment options in its app store following an investigation by the UK’s competition watchdog into the dominance of the tech giants.

The Competition and Markets Authority said on Wednesday that Google pledged to give app developers the freedom to opt out of its UK Google Play billing system and use alternatives to process payments in the app, in a a move long opposed by the large technology group.

The draft pledges come after the CMA filed an enforcement action against the search engine company last year over potential competition law violations by forcing app developers to use Google Play’s payment system to process purchases in app.

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

While we’re pleased that our investigation has led Google to offer in-app payment freedom to thousands of app developers, we need to make sure these pledges work in practice, said Ann Pope, senior director of antitrust at the CMA.

Both Google and Apple are being scrutinized by antitrust regulators around the world over their alleged stranglehold on 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 has allowed non-game apps to provide alternative billing systems for in-app purchases for customers in the European Economic Area starting July 2022.

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

Google said on Wednesday that 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 roll out to all apps by October. It will be offered to non-gaming app developers first, initially excluding one of the biggest and most lucrative 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 service fee will be reduced by 4%. If the developer does not offer Google’s billing system as an option, the cost of the service will be reduced by 3%.

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

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

Google’s Play Store rules previously required app developers to use their 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%.

Once the largest apps exceed $1 million in revenue, Google charges a 30% commission on in-app purchases. Apple follows a similar pattern on its app store.

In February, the EU said it would narrow the focus of a long-running investigation into Apple to how it prevents apps from informing users about alternative and potentially cheaper subscription options. That meant it dropped a separate charge accusing Apple of forcing developers to use its own in-app payment system.

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