Regulators must address the competitive harms of the Payments API

Payments were one of the four retail finance sectors that the Financial Conduct Authority raised in its initial assessment of the competitive implications of Big Tech entry. Whilst it was acknowledged that Google and Apple already possess a large market share, the analysis of potential harms versus potential benefits offered by the FCA, is forward looking. 

MOW’s view is that harm has already occurred. Google and Apple are currently integrating payments within their browsers in a way that offers little scope for competition from alternative solutions. 

Both businesses run on user data. They are seeking to increase their share of this data by capturing more information via sign-on and authentication and bundling business-to-business functionality into their business-to-consumer software OS and browsers. 

One of the means by which this has been achieved is through their dominance at the World Wide Web Consortium (W3C), the largest internet standards-making body, which allows them to effectively exercise unchecked control over the architecture of the web. As an illustration of their power, Google send over 100 representatives, from those companies that also contribute one representative is usually sent. 

Google and Apple coordinated their positions on authentication and sign-in, jointly creating a template to disintermediate publishers (see MOW’s recent post here). 

Likewise, both companies have used their dominant positions in the Web Payments Community Group at the W3C to force through the Payments API, despite complaints from other stakeholders. Just as sign-in templates severs publishers’ direct relationship with users, the Payments API achieves the same for online merchants, elevating the browser from a user agent to an active participant which can intervene in communication.

This allows Google and Apple to discriminate against other payment solutions in the browser in the same way they restrict competition between payment systems through their app store agreements and guidelines, where Apple and Google prefer their own payment systems. The following image was screenshotted the day after the Payment API was implemented at the W3C:

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We are raising this issue with the CMA in its browser enquiry, which concerned with the bundling of payment solutions into app stores. We also raised the fact that sign-in templates risk entrenching the dominance of platforms to Ofcom and the ICO.

Please follow the link below to download a full explanation of how Google and Apple are increasing their share of end user data through sign-in and authentication.