The App Tax: Why the UK Must Challenge Apple and Google’s Duopoly

British Smartphone Users Pay £700m Annually in App Store Fees

British mobile phone users pay approximately £700m per year in commissions to Apple and Google through in-app purchases, according to research commissioned by the Coalition for App Fairness and reported in the Daily Mail. This total exceeds the combined UK corporation tax paid by both tech giants by £232m, translating to roughly £55 annually for a household featuring four smartphone users.

How the Duopoly Controls In-App Purchases and Pricing

Apple and Google command an effective duopoly over mobile platforms, powering at least 90% of UK mobile devices according to findings by the Competition and Markets Authority (CMA). Developers selling subscriptions, games, or software through either the Apple App Store or the Google Play Store face commissions reaching up to 30% on internal purchases. With no alternative platforms available on iPhones and no practical distribution routes outside Google Play for Android users, developers must accept Silicon Valley terms regardless of production costs. To protect these profit margins, both corporations enforce anti-steering restrictions that prevent developers from informing users about cheaper purchasing options elsewhere.

Financial Strains Placed on Independent British App Developers

The up-to-30% commission and strict steering bans carry direct operational consequences for smaller enterprises. Without alternative app stores to apply downward pressure on fees, software creators lack the power to negotiate supplier terms that standard commercial markets would normally reject.

Regulatory Powers Await Binding Enforcement Actions

Parliament sought to address market dominance by passing the Digital Markets, Competition and Consumers Act in 2024 with cross-party backing, equipping the CMA with statutory powers to alter dominant platform behavior. However, the CMA has historically favored voluntary commitments rather than mandatory enforcement. While the regulator’s consultation on steering rules has concluded with a decision anticipated soon, market observers express concern that voluntary gestures may replace binding legal mandates. As the government prepares to establish its policy framework on major technology providers, industry participants await definitive regulatory intervention to curb unconstrained platform fees.