How App Store Price Controls Could Cost Users Dearly

When the last government created the Digital Markets Unit, one could envisage two extreme futures for it. It could become a nimble competition watchdog, avoiding heavy Brussels-style regulation and placing Britain at the frontier of tech innovation. Or it could treat big tech platforms like utilities, smothering them in rules and redesigning popular markets according to officials’ competition blueprints.

The early evidence is not encouraging. The DMU, housed within the Competition and Markets Authority, has proposed complex new price regulation for Apple’s and Google’s app stores. It’s not quite Ofwat for apps — but the resemblance with utility-rate regulation has caught the sector off guard.

App stores’ critics have long complained that developers are restricted from telling customers about other ways to subscribe to their services. Spotify, for example, must pay Apple a commission on an in-app subscription, but cannot link from the app to its own website for customers to purchase there. Regulators argue that this restriction blunts competition and leaves users unaware of cheaper alternatives.

The platforms reply that app stores do more than process payments. They screen for malware, supply developer tools, handle refunds, police fraud and provide businesses with customers in a trusted marketplace. The commissions help finance that ecosystem, rather than representing pure rent.

The tech giants thus dispute whether they should be obliged to allow developers to advertise on platforms they built from scratch. Should Tesco have to let Heinz use its stores to advertise where ketchup is cheaper?

Under the DMU’s plans, app developers would gain a new right to steer users towards outside websites with other payment options. To ensure Apple and Google get reimbursed for their genuine services, the tech giants could still levy a fee on purchases completed via those links. This fee, however, would be subject to CMA regulation.

Without some price controls, it is feared Apple and Google might charge so much that nobody makes use of steering. Yet cap fees too low and there’s clearly less incentive for Apple and Google to invest in the integrity of their ecosystems.

To manage this tension, the CMA proposes intrusive price regulation. Apple and Google would have to parse the costs of app reviews, malware checks, software tools, fraud prevention, customer support and security, then identify which were “materially and directly” connected to completed purchases.

CMA officials would then decide how much common investment could be recovered, what profit was reasonable, how much value arose from platform trust, how much reflected market power and how much app developers collectively contributed themselves.

If that all sounds like a technocratic nightmare, it’s because it is. Price fixing is hazardous enough for something tangible like water passing through pipes. It is vastly harder in a sector built on intangible assets, software and trust, where each app draws different value from the platform.

Lawyers, accountants and economists will have a field day. Whether consumers benefit is less clear. True, they may get some cheaper subscription options, at least if developers don’t pocket most of the difference. A low fee, though, could also lead to Apple and Google investing less in the security, verification and payment infrastructure that consumers trust.

Consumers highly value these features. A recent Public First poll, albeit commissioned by the tech industry’s trade body, found that many more respondents prioritised secure payments (45 per cent) and fraud protection (39 per cent), compared with lower prices (25 per cent) for buying apps or subscriptions online. This is not an unusual finding. The CMA’s own 2025 survey found users cited convenience, choice, security and privacy far more frequently than affordability in justifying their use of various platforms.

Here is a successful sector, then, built over years to foster consumer trust that is now threatened with regulatory redesign based on the CMA’s preconceptions about competition. Britain has no shortage of genuinely broken customer experiences. Regulating this seems a strange priority.