According to the CMA, Google has agreed to allow developers to offer alternative payment options in its app store following the CMA launching a probe into its control over Google Play in-app purchases. While this appears to be a positive development on its face, a deeper look at the commitments offered by Google, appears to reveal that not much will change for app developers.
One of the concerns is that currently Google Play accounts for over 90% of native app downloads on Android devices and restrictions placed on app developers currently require them to use Google Play’s own billing system for in-app transactions involving digital content. The current commitments only discount the fees payable to Google by up to 4 percent.
Currently Google takes 30% of revenue for digital goods offered for sale on in-app purchases. This means any developer seeking to switch from Google’s payment services will still have to shell out 26-27%, plus the fee for the payment service they switch to.
This raises the question of who is generating real value and who should be paying what. As it stands content makers (whether news, games or music) all have to pay Google to be in its app store. Google’s app store is a monopolised distribution platform. It can in effect charge what it likes because there is no alternative. This would not happen if the market was competitive. In competitive markets value is determined by customers choosing from among alternatives and prices are driven toward costs. Cost models from utility regulation can easily be used to determine the relevant value that would apply if the market was competitive – they would suggest payment for costs of distribution. But cost models understate the value of content to the platform. People access platforms to see, hear or play with content. News in the majority of searches.
Repeat visitors are valuable to advertisers and content that people access often is more valuable than infrequently visited sites. News, Music and Games are “Golden websites” – some content generates more value for the platforms than others.
We believe that this value needs to be recognised in any remedy for access to content.
The commitments don’t address this at present.
Submissions to the CMA on these Commitments are open till 19 May 2023.
 See https://www.gov.uk/government/consultations/proposed-commitments-regarding-changes-to-google-plays-rules-to-allow-certain-app-developers-to-use-alternative-billing-systems-for-in-app-purchases.