The UK’s Competition and Markets Authority (CMA) has invited developers and interested parties to respond to Google’s proposal to allow Android developers to use alternative billing systems.
“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,” said Ann Pope, Senior Director of Antitrust at the CMA.
Google’s proposal comes in response to the CMA’s enforcement action against the company last year, which focused on conditions it set for developers for in-app payments.
The proposal offers two options: Developer-only Billing (DOB), or User Choice Billing (UCB), which would give users the option of choosing between alternative billing and Google Play billing (GPB).
Google has proposed a four percent reduction in the service fee it charges developers for in-app digital sales if they offer users the option of selecting an alternative billing method and a three percent reduction if they opt not to use GPB.
The fee reduction is part of Google’s proposal to settle the concerns raised by the CMA. Google has also requested the ability to phase in the proposed commitments, with the service being initially available to developers of non-gaming apps before extending to gaming apps no later than October 2023.
“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,” added Pope.
The CMA concluded a year-long study of the mobile ecosystem last summer, identifying concerns over the market power of the duopoly comprising Google with Android and Apple with iOS.
A consultation on Google’s proposal has been opened by the CMA and it is inviting developers and other interested stakeholders to respond by 19th May. After considering responses, it will make a decision on whether to accept the commitments and resolve the case.
Rick Vanmeter, Executive Director of the Coalition for App Fairness, has already voiced his opinion on Google’s proposal:
“Google’s proposal to allow third-party payment options is nothing more than a reallocation of fees. This proposal would enable them to continue taking a massive cut on services they do not even provide.
This solution will not create meaningful competition and is a bad deal for developers and consumers.
We will continue working with the CMA to bring real competition to the mobile app ecosystem.”
The proposal is an extension of the choice of an alternative billing system that Google already offers in the European Economic Area (EEA) and in other parts of the world, such as South Korea and India, where Google was forced to offer alternative billing after being slapped with a $162m fine for antitrust practices last fall.
Google’s proposal requires developers to meet appropriate user protection requirements, and service fees and conditions will continue to apply to support investments in Android and the Play Store.
The CMA is keen to hear feedback on Google’s suggested service fee reduction, the proposed process for reporting in-app purchase-related turnover to Google, the use of information screens, the billing choice screen for UCB, and the process Google is proposing to monitor its compliance with the commitments.
The CMA has provisionally considered the proposed commitments appropriate to address the particular competition concerns resulting from the conduct that it investigated in this case. Both DOB and UCB would allow app developers the opportunity to use billing systems of their choosing, breaking the link that the GPB requirement currently creates between access to Google Play and access to millions of Android users.
“Both DOB and UCB would allow app developers the opportunity to use billing systems of their choosing (and DOB would allow them to choose not to offer GPB at all), breaking the link that the GPB requirement currently creates between access to Google Play and the use of Google’s proprietary billing system for in-app sales of access to digital content or services,” wrote the CMA in its Notice of Intent.
“Those app developers opting to use an alternative billing system will have the possibility of establishing direct relationships with customers and overseeing their own transactions. They may also be able to offer pricing deals which are different to prices where GPB is used.
“Moreover, third-party payment processors will be able to 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 increased choice and competition.”
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