Britain's competition regulator proposed easing payment restrictions on Apple and Google's app stores, a move that follows Google's recent policy shift allowing developers greater flexibility in directing users to external payment systems.
The UK regulator's proposal comes as Google's Play Store introduced new terms earlier this month that permit app developers to steer users toward completing transactions outside the platform. The changes aren't without limits—Google's updated policy includes restrictions on how developers can implement external payment options and introduces a revised fee structure for apps that take advantage of the new flexibility.
The Competitive Landscape
The regulatory intervention reflects growing pressure on Apple and Google to open their tightly controlled app ecosystems. Both companies have faced scrutiny from competition authorities in multiple jurisdictions over their app store practices, particularly the mandatory use of their payment systems and the commissions they charge—typically 15% to 30% of transactions.
Google's preemptive move to adjust its Play Store terms suggests the company recognized the regulatory trajectory and opted to make changes before being compelled to do so through formal enforcement action. The timing of the UK regulator's proposal, coming shortly after Google's policy update, indicates coordination or at least awareness between the tech giant and competition authorities.
What's Changed
Under Google's new Play Store terms, developers can now direct users to alternative payment methods outside the app. This represents a significant shift from the previous model, where such steering was prohibited and developers were required to use Google's payment processing exclusively for in-app purchases. However, the policy isn't a complete liberalization—Google maintains restrictions on how prominently developers can promote external payment options and continues to collect fees, albeit at potentially different rates, when users are directed outside the platform.
The UK regulator's proposal would formalize these types of changes across both Google's Play Store and Apple's App Store, creating a consistent regulatory framework rather than relying on voluntary company policies that could be reversed.
Apple's Position
The proposal affects Apple as well, though the company hasn't announced Play Store-equivalent changes to its App Store policies in the UK market. Apple has historically maintained stricter control over its ecosystem than Google, arguing that its closed system provides better security and user experience. The company has made limited concessions in other markets, including the European Union, where regulatory pressure has been particularly intense.
The UK regulator's approach suggests it's seeking to establish rules that apply equally to both dominant app store operators rather than allowing each company to craft its own response to competitive concerns.
Industry Implications
App developers, particularly smaller companies and startups, have long complained that the 30% commission charged by Apple and Google on in-app purchases significantly reduces their revenue. The ability to steer users to external payment systems could allow developers to avoid or reduce these fees, potentially improving their economics.
However, the practical impact depends heavily on the details of the restrictions Google has imposed and what limitations the UK regulator ultimately approves. If the steering process is cumbersome or if the alternative fee structure still captures most of the transaction value, developers may see limited benefit.
Why This Matters:
The UK regulator's proposal represents a test case for how competition authorities can reshape digital platform economics without dismantling the app store model entirely. If successful, it could establish a template for other jurisdictions grappling with similar questions about platform power and developer freedom. For Apple and Google, the challenge is maintaining revenue from their app ecosystems while accommodating regulatory demands for greater openness. Google's proactive policy changes suggest the company believes some flexibility is inevitable and that shaping the terms of that flexibility is preferable to having them imposed. The outcome will influence how hundreds of thousands of app developers structure their businesses and whether alternative payment systems can gain meaningful traction against the incumbent platforms. It's also a signal to other tech giants that regulatory patience with closed ecosystems is wearing thin, even in markets traditionally more hands-off than the European Union.