Google has proposed allowing developers who offer apps through the UK Play mobile app store to use alternative payment processors for in-app transactions, rather than being tied to their own billing system (GPB), following an antitrust intervention by the British Competition and Markets Authority (CMA).
“Google’s proposed commitments would give app developers the freedom to offer a different billing system of their choice, known as ‘Developer-only Billing’ (DOB), or give users the choice between an alternative billing system or the third-party billing system. Google Play, known as ‘User Choice Billing’ (UCB),” the regulator explains in an enforcement update.
The CMA has opened a consultation on Google’s proposal, which it says it is willing to accept, inviting developers and other interested stakeholders to comment by May 19. After considering the responses, it will make a decision about accepting the commitments and resolving the matter.
Last summer, the regulator completed a year-long study of the mobile ecosystem, which revealed serious concerns about the market power of the duopoly (Google with Android and Apple with iOS). At that time, in addition to opening certain other in-depth probes into aspects of the operations of the two tech giants, it announced to take enforcement action against Google regarding its app store payment practices. The CMAs The concern here focused on the conditions it places on developers for in-app payments. So Google’s proposal is intended to address those concerns.
In a blog post describing Google’s offerings, Legal Director, Oliver Bethell writes:
Under the commitments, developers will be able to add an alternative in-app billing system in addition to Google Play’s billing system for their mobile and tablet users in the UK. At checkout, users can choose which billing system they want to use. These options are presented in a neutral way so that users can make an informed and involved choice.
“Developers can also choose not to offer Google Play billing at all when their UK users pay for digital content and services,” he adds.
In the blog post, the company also notes that its proposal in the UK would expand the choice of an alternative billing system it already offers in the European Economic Area (EEA) — where Google has faced some antitrust enforcement in recent years — and in other parts of the world; like South Korea, where lawmakers stepped in in 2021 to force Google billing. India is another country where Google is gearing up to offer alternate billing after it was fined $162 million last fall for antitrust charges.
For its UK offerings, Google is proposing to lower what it bills as the per-transaction “service fee” it charges developers for in-app digital sales – known as the rebate/commission (or the app store tax, as some criticize such charges) – by 4% when a developer offers users a choice that includes GPB but the user selects alternate billing. But if developers opt not to offer Google’s own payment processing system, the proposed stick is a slightly lower cut of Google’s rebate – reduced to 3% in that scenario, seemingly incentivizing developers to continue offering users the option to use their own payment technology. Selecting.
(NB: Google’s base service fees for the Play Store start at 15% for the first $1 million in earned revenue per year, rising to 30% for all annual revenue above that threshold – so under the alternative billing proposal, the fee would remain more than 10% in almost all scenarios. For auto-recurring subscriptions, Google’s default cut is 15%. Though it says some types of media content apps may charge a fee less than 15% under the Play Media Experience program.)
Here it appears to be offering a mix of what it’s already rolled out elsewhere: developers in South Korea and India get a 4% discount when using alternate billing, while developers in the EEA got a 3% discount last summer.
“Both options still require developers to meet user protection requirements, and service fees and terms and conditions will continue to apply to support our investments in Android and Play,” Google added.
It also wants to be able to phase in the proposed commitments, arguing that this will give time “to make the necessary changes” to its systems – initially by making them available to non-gaming developers apps; and then bringing them to gaming apps “by October 2023”.
Whether Google gets its way is up to the CMA, which will decide whether to accept the proposal — and that may depend on the kind of feedback it gets.
The regulators say they are particularly interested in feedback on Google’s proposed service fee reduction (“under each of UCB and DOB); as well as additional elements, including the proposed process for reporting in-app purchase-related revenue to Google (manually or using APIs) for the service charges to be calculated; the use of information screens and, for UCB, a billing selection screen; and the process it proposes to verify Google’s compliance with the commitments, in particular a commitment it has made not to retaliate against app developers who choose to use UCB or DOB.
“Based on the information received to date by the CMA, and for the reasons set out below, the CMA provisionally considers the proposed commitments to be appropriate to address the specific competition concerns arising from the conduct investigated by the CMA in this case .” the regulator writes in the summary of its letter of intent to accept the commitments
“Both DOB and UCB would allow app developers to use billing systems of their choice (and DOB would allow them to offer no GPB at all), breaking the link the GPB requirement currently creates between access to Google Play and the use of Google’s own billing system for in-app sales of access to digital content or services.”
“Those app developers who choose to use an alternative billing system have the ability to establish direct relationships with customers and oversee their own transactions. They may also be able to offer pricing agreements that differ from pricing using GPB. In addition, third-party payment processors can offer their services to potential app developer customers for in-app purchases of digital content or services within an app distributed on Google Play, allowing app developers to benefit from greater choice and competition. CMA also suggests.