UK Regulator Challenges Apple and Google's App Store Dominance

The UK’s competition watchdog is challenging Apple and Google’s “effective duopoly” over mobile platforms by allowing developers to steer users away from their app stores to make purchases.

The Competition and Markets Authority argues that consumers and app owners are being let down by Apple and Google restrictions on spending money outside their app stores.

The regulator has described both tech companies as operating an “effective duopoly” with at least 90% of UK mobile devices running on their platforms.

The CMA said tackling barriers on “steering” – or letting apps guide users to websites where they can make purchases outside Apple and Google’s platforms – would benefit competition.

The regulator is consulting on lifting those constraints, in a move that it said would allow apps to bypass “mandatory fees” set by Apple and Google. Both companies now charge a commission of up to 30% on purchases made inside apps, such as subscriptions. Google said it had already made the required changes, including allowing apps to steer their users outside the Play Store to complete transactions.

The restrictions have meant, for instance, that Spotify does not allow users to buy monthly subscriptions in the Apple app store because it does not want to pay the fees and pass them on to consumers. Instead, would-be subscribers need to sign up via the desktop website in the UK.

Will Hayter, the CMA executive director for digital markets, said it was important to give apps and users more choice about how they carry out transactions and communicate.

“This is not only because choice is inherently valuable but also because we see this as the best way to introduce some competitive pressure in a vital part of the mobile ecosystem that is otherwise sorely lacking such pressure,” he said.

The CMA said Apple and Google could still levy fees for allowing steering, but that such charges would have to be applied fairly. Google has also implemented changes to fees that it charges apps as of this week, including fees for “steering” users to alternative payment methods.

The Coalition for App Fairness, whose members include Spotify and the dating company Match Group, criticised the steering fee proposal and said any charges should be justified by “transparent data” from Apple and Google explaining any underlying cost to the tech companies.

The CMA is also considering requiring Apple to open up access to its near-field communication technology, ​which could allow developers to offer contactless payment services within their own iOS apps.

The move follows the CMA’s decision last October to give Apple and Google “strategic market status” for their dominance in the mobile market, which allows the watchdog to set bespoke conduct rules for those companies.

Apple said steering changes undermined protections for users and opened the door to scams and circumventing parental controls.

“When users are directed away from Apple’s trusted payment infrastructure, they lose the protections they rely on Apple to provide. We will continue to make our concerns clear in our ongoing dialogue with the CMA,” an Apple spokesperson said.