Google Would Ease In-App Payment Rules Following UK Probe

April 20, 2023
Google said it would give app developers the choice to decide which billing system and in-app payments processor they want to use in exchange for closing a UK antitrust investigation.

Google said it would give app developers the choice to decide which billing system and in-app payments processor they want to use in exchange for closing a UK antitrust investigation.

The commitment was made in an investigation by the Competition and Markets Authority (CMA) and is now open for public consultation.

Around 90 percent of native app downloads on Android devices take place via the Google Play store, which places restrictions on app developers to use Google Play’s own billing system for in-app transactions involving digital content.

In 2021, Google Play accounted for 30-40 percent of all net revenue generated by UK consumers using in-app payment systems and the bigtech pocketed around 25 to 30 percent of that as a commission.

Under the new proposals, Google would allow app developers to offer a different payment system of their choosing, known as developer-only billing (DOB), or offer users a choice between an alternative payment system and Google Play’s billing system, known as user choice billing (UCB).

The commitment includes that Google would lower its service fee by at least 3 percentage points under the DOB scheme and by at least 4 percentage points under the UCB.

Third-party payment providers would have the ability to market their services to app developers for processing transactions involving digital content.

This would enable “greater innovation and competition” for Google Play in-app payment services, according to the CMA, and allow app developers to have a more direct relationship with their customers.

For instance, users may get access to new special offers and in-app deals that are not permitted under current Google Play rules and could potentially save money or get a different user experience while streaming films and TV shows.

The case stems from the antitrust watchdog’s market study into mobile ecosystems which found that Google’s control over payment processing is potentially leading to higher prices and reduced choice for Android users.

Along with the finding, the CMA announced last June it would open an antitrust investigation into the bigtech.

Although the agency said it is inclined to accept the commitments made by Google, Ann Pope, senior director of the CMA, stressed they want to make sure these commitments “will work in practice”.

“So we welcome all feedback, which we will carefully consider before making a final decision”.

The consultation is open until May 19, 2023.

Google said it appreciates the CMA’s "thoughtful approach and the constructive dialogue we’ve had throughout this process".

The tech giant stressed it has been "a leader in platform openness" and Android phones offer people and businesses more choice "than any other mobile platform".

"We’ll continue to listen to feedback and continue to invest to help developers thrive on Google Play," the firm added.

In-app payment restrictions on Android and iPhone devices have come increasingly under the spotlight as regulators around the world are pushing for more choice and competition.

In a February report, the US Department of Commerce noted that the mobile app store models of Google and Apple are “not a level playing field” and it is unclear how the current in-app payment system “benefits anyone other than Apple and Google”.

In Russia and the Netherlands, regulators handed fines totalling $67m to Apple for restricting payments and ordered the company to open up its payment systems to competitors.

Similar actions have taken place against Apple in South Korea, as well as against Google in India and Indonesia.

Meanwhile, the EU has two parallel investigations looking at the legality of in-app purchase requirements on iPhones and the bigtech giants will soon be legally obliged to open up their payment systems under the EU’s Digital Markets Act, as reported by VIXIO.

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