Google is proposing changes to its so-called “app store tax” to developers in the United Kingdom following a probe from the country’s anti-trust watchdog, the Competition and Markets Authority (CMA).
According to a blog post written by the company’s Legal Director, Oliver Bethell, Google is offering a similar scheme to what has been proposed in other jurisdictions like the European Union and India where the company has faced similar investigations.
Moving forward, developers will be able to choose between offering a separate billing alternative – also known as ‘Developed-only Billing (DOB)’ or a combination of Google’s payment system and other options that the user can choose from. This latter arrangement is known as ‘User Choice Billing (UCB)’.
The service fee charged for in-app purchases and other similar transactions will be effectively reduced by 4% if developers opt to offer UCB while a 3% reduction is being offered if they go for the DOB alternative – which completely excludes Google Pay for billing purposes.
This would result in total fees of approximately 11% and 12% in each scenario considering that Alphabet (GOOG) – the parent company of Google – charges a flat 15% fee on all transactions made within these apps.
The tech firm emphasized that the rollout of this arrangement will first include non-gaming apps after the proposal is approved by the CMA while gaming apps will enjoy these new terms before October 2023.
The CMA is Leaning Toward Accepting This Proposal from Google
The CMA is currently open to receiving comments from developers within the UK who would like to share their thoughts about Google’s proposal. The deadline to submit these opinions is 19 May. After reviewing these comments, the CMA will ultimately decide if it agrees with Google’s proposed scheme or not.
However, the regulatory agency has considered the proposal to be “appropriate” to address the concerns it set forth during its investigation as the scheme would allow developers to introduce alternative billing systems.
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“The Proposed Commitments mean that GPB will no longer be mandatory, giving app developers a choice in principle between offering users Google’s billing services, another provider’s, or both” the regulator asserted.
However, the CMA also emphasized that it will be asking questions about how the process of migrating from a GPB-only scheme to either a DOB or UCB system will work to ensure that there are no unnecessary obstacles that, in practice, prevent developers from adopting an alternative billing system.
In this regard, the CMA is prompting Google to provide details about how in-app purchases will be reported to the firm – either by using an API or manually – and how information screens will be displayed in case the developer opts to use UCB.
The UK is Not Alone in Its Effort to Level the Playing Field for Developers
Multiple countries appear to be forcing Google to back down from an alleged monopolistic business model that forces developers to rely on its mobile app store to distribute their software to users of the Android operating system.
Aside from the preferential treatment the Google Play Store receives on these devices, the company also charges elevated commissions on all purchases made within the apps it distributes and demands the exclusive use of its billing system to process the payments.
The CMA’s investigation started in 2022 when the agency accused Alphabet of breaching the country’s 1998 Competition Act. The probe was launched after the agency conduct a one-year study of both Apple (AAPL) and Google’s practices concerning its mobile ecosystems.
According to the CMA, the two companies “hold all the cards” when it comes to the mobile market as they control nearly 97% of all web browsing activity in the United Kingdom. This dominant position has allowed them to establish harsh terms that developers have complained about for years including elevated service fees.
The European Union and South Korea recently forced Google to give developers the right to use alternative billing systems as well while the company was slapped with a $162 million fine in India for its monopolistic practices.
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