Mobile app developers have long been restricted by Google‘s strict rules pertaining to billing: only allowing developers to use its own billing system. However, in response to a probe into these practices by the Competition and Markets Authority (CMA), the tech giant has proposed allowing developers to use alternative payment processors for in-app transactions for the first time.
June 2022 saw the CMA open an investigation into Google Play, suspecting it may have infringed on UK competition rules with its app store payment practices. In an effort to address concerns related to imposing too strict restrictions on developers, Google has proposed to loosen the reigns by enabling them to “break away” from its own billing system.
As a result, the CMA has now launched a consultation in an attempt to ascertain whether these proposals will adequately suffice and put an end to its investigation. The UK authority has given developers and other interested parties until 19 May 2023 to respond to the proposal. It will take responses into account as it looks to make a final decision on whether to accept the proposal. If accepted, it would ultimately end its case and not come to a decision on whether Google Play has infringed Competition Act 1998 (CA98).
Ann Pope, senior director of antitrust at the CMA, said: “Google’s complete control over in-app payments raised concerns this unfairly restricted app developers – by forcing them to use Google Play’s billing system – putting distance between them and their customers and reducing competition, to the detriment of Google Play users.
“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 – so we welcome all feedback, which we will carefully consider before making a final decision.”
Google’s new in-app payment proposals
Google Play currently accounts for over 90 per cent of native app downloads on Android devices and existing restrictions placed on app developers currently require them to use Google Play’s own billing system for in-app transactions involving digital content.
Google’s newest proposals would enable developers to use a payment system of their choice, known as ‘Developer-only Billing’ (DOB). Alternatively, developers could offer users a choice between an alternative payment system and Google Play’s offering, known as ‘User Choice Billing’ (UCB).
Third-party payment providers could begin marketing their services to app developers processing transactions for digital content. If the proposals are accepted and made a legal requirement for Google dealings in the UK, it is hoped they will enable greater innovation and competition in the space.
Oliver Bethell, director of legal at Google, explained how charges related to its services would change depending on each option in a blog post: “When a user selects alternative billing, we will reduce the developer’s service fee by four per cent.
“When developers choose not to offer Google Play billing at all, the service fee the developer pays will be reduced by three per cent.”
Bethell also detailed how soon the changes could come into effect: “Our proposal is for these commitments to be phased in. They will first be made available to developers of non-gaming apps should the commitments be accepted by the CMA following the public consultation. Following this, the roll out of these commitments to gaming apps will come into effect no later than October 2023.”