In December 2021, the Competition and Markets Authority (CMA) interim report into mobile ecosystems, stated that the duopoly power of Apple and Google is restricting choice in how users pay for in-app purchases for digital goods like games credits, dating and subscriptions. Currently, users are tied to Apple and Google’s own payment systems, and are charged a commission of up to 30% for this. Apple and Google justify this under the guise of safeguarding users’ privacy and ensuring they receive a quality service. However there are consequences to dominance in any market and ultimately by restricting choice, there will be a negative impact on factors such as user experience and verification. With the current situation, users are unable to pay in-app for digital goods using more progressive payment options such as Open Banking account 2 account payments and instead are reliant on Google and Apple’s own payment systems. Unfortunately app providers have no option but to comply with these terms as a heavy penalty is levied on the developers if they choose to offer their users an alternative payment method, as Epic Games discovered when their app was removed from both the Apple App Store and Google Play Store.
This unfair practice locks third party payment providers like GlobalCharge out of in-app payments for digital services. That’s why GlobalCharge has joined the Coalition for App Fairness, which was set up by industry leading companies including Match Group, Epic Games, Spotify and Tile to advocate ‘freedom of choice and fair competition across the app ecosystem.’ GlobalCharge shall be supporting CAF’s engagement and closely monitoring the progress of competition authorities across the globe in tackling this unfair practice.
There has been some degree of success in Europe with the Dutch competition authority (ACM) managing to make inroads into Apple’s anti-competitive behaviour. Following a ruling in December 2021 they were the first competition authority to start enforcing competition laws against Apple for applying unreasonable conditions for dating apps in the Apple Store. Unfortunately, to date there seems to be a lack of compliance with the ruling and dating app providers are still unable to offer their users alternative payment methods.
In the UK, the CMA’s interim report into mobile ecosystems, sets out a range of actions that could be taken to address these issues, including “Enabling all apps to give users a choice of how they pay in-app for things like game credits or subscriptions, rather than being tied to Apple’s and Google’s payment systems.” The final report is expected in June this year. Watch this space.