The UK's Competition and Markets Authority (CMA) has taken a significant step towards dismantling what it claims is an 'effective duopoly' in the mobile app ecosystem, dominated by Apple and Google. The regulator's proposals aim to reduce the market power of these tech giants by empowering app developers to guide users towards external websites for making purchases, thus bypassing the mandatory in-app payment systems imposed by Apple and Google.
This move targets the substantial commissions charged by Apple and Google on transactions within their respective app stores – often reaching up to 30%. The CMA argues that these restrictions hinder competition and ultimately disadvantage both consumers and app developers. By enabling 'steering' of users towards alternative payment methods outside the platforms, the regulator seeks to introduce much-needed competitive pressure into a vital segment of the digital economy.
The regulator highlighted that Apple and Google collectively control at least 90% of all mobile devices in the UK, affording them immense power over how apps operate and monetise their services. Will Hayter, the CMA executive director, stressed the importance of granting more choice to apps and users regarding transactions and communication. He stated that this move is crucial for introducing competitive dynamics where they are currently lacking.
While Google has indicated it has already implemented some changes, including allowing apps to steer users outside the Play Store for transactions and adjusting associated fees, the CMA's proposals could go further. The watchdog is also considering whether to compel Apple to open up access to its near-field communication (NFC) technology, which could enable developers to offer their own contactless payment services directly within iOS applications. This follows the CMA's decision last October to grant Apple and Google 'strategic market status' due to their market dominance, allowing the regulator to impose specific conduct rules.
However, Apple has voiced concerns regarding the proposed changes. A spokesperson for the company stated that allowing users to be directed away from Apple's trusted payment infrastructure could undermine user protections, potentially opening the door to scams and circumventing parental controls. They affirmed Apple's commitment to continue discussing these concerns with the CMA.
The CMA's intervention reflects a broader global trend among regulators to address the market power of large technology companies. By fostering a more competitive environment, the watchdog hopes to drive down costs for consumers and encourage greater innovation among app developers.