UK proposes rules to allow Apple, Google app stores offer alternative payment options

Britain’s competition regulator has proposed new rules that would allow app developers to direct users to alternative payment methods outside the app stores operated by Apple and Google, a move aimed at reducing commissions, boosting competition and lowering costs for consumers.

The proposal, announced on Tuesday by the UK’s Competition and Markets Authority (CMA), forms part of broader efforts to curb the market power of the world’s largest technology companies and create a more competitive digital marketplace.

If implemented, the changes would remove restrictions that currently prevent developers from steering users to external payment platforms, a practice prohibited by Apple and heavily restricted by Google.

What they are saying

The regulator said any fees charged by the two companies for enabling such “steering” must be fair, reasonable and significantly lower than existing app store commissions.

According to the CMA, any cost savings generated by the reforms should either be passed on to consumers through lower prices or reinvested by developers to improve products and services.

The CMA said the reforms are intended to foster greater competition while ensuring that Apple and Google receive appropriate compensation for the services they provide.

• “While it is only fair for Apple and Google to be compensated for the services they provide, any fees they charge must be justified through a robust, evidence-led framework involving due reference to both cost and value,” Will Hayter, Executive Director for Digital Markets at the CMA, said in prepared remarks.

The proposals target one of the most contentious issues in the global app economy: mandatory use of in-app payment systems that require developers to pay commissions on digital purchases.

By allowing developers to promote alternative payment channels, businesses could avoid part of the fees charged through Apple’s App Store and Google’s Play Store, potentially improving profit margins and offering consumers more payment choices.

What you should know

The regulator had previously considered requiring Apple to open access to the iPhone’s contactless payment technology, a move that would enable UK financial technology firms to develop competing digital wallet applications for iOS devices.

• Such a change could expand competition in mobile payments by reducing Apple’s control over Near Field Communication (NFC) technology used for contactless transactions.

Google, meanwhile, stated recent changes to the Play Store already allowed developers greater flexibility in directing users to alternative payment methods, suggesting that some of the regulator’s objectives have already been addressed.

• For app developers, including fintech companies, streaming platforms and digital content providers, the reforms could significantly reduce the cost of distributing apps and processing payments.

Consumers could also benefit from lower prices, greater payment flexibility and increased innovation as developers retain more revenue to invest in new products and services.