Apple and Google are accused of collecting up to £100 million annually from Britons seeking romantic partners through dating apps, a figure derived from a 'app tax' levied on platforms like Tinder and Hinge. Analysis indicates that users spent approximately £300 million on these services, with the tech giants taking a commission of up to 30 percent on subscriptions and in-app purchases.
The commission, described as a 'stealth levy,' can disproportionately affect users of dating apps. While subscription renewals after a year may incur a 15 percent fee, new customers or those rejoining after a hiatus can face the higher 30 percent rate. This has prompted renewed calls for the UK's Competition and Markets Authority (CMA) to investigate.
App Tax Impact
Campaign group the Coalition for App Fairness (CAF) commissioned research suggesting that UK smartphone and tablet users currently pay an additional £700 million per year due to the 'app tax.' This figure is projected to rise to £1.2 billion annually in five years, amounting to an extra £4.1 billion for Britons over the period. While app developers officially pay these fees, campaigners argue that the costs are ultimately passed on to consumers, leading to price increases of up to one-third for digital services. Critics also contend that these fees stifle competition within the UK's tech sector by diverting profits that could be reinvested.
Members of Parliament have voiced concerns about the app store fees. Damian Hinds, a member of the Commons technology committee, described the up to 30 percent fees as 'excessive,' suggesting that even 15 percent is substantial for smaller companies. He indicated that the CMA's involvement is a 'legitimate thing to look into' and that regulatory action may have been too slow. Liberal Democrat MP Martin Wrigley, also on the committee, urged for stronger regulatory measures to prevent exploitation.
Developer Fees and Consumer Awareness
Simon Newman, CEO of the Online Dating and Discovery Association, stated that the fees charged by Apple and Google are unjustifiable and urged the CMA to intervene against 'Big Tech profiteering.' Apple introduced a reduced 15 percent rate in 2020 for smaller developers earning below $1 million annually, but critics maintain this is still too high. Furthermore, Apple's guidelines reportedly limit developers' ability to direct users to external payment pages or QR codes, hindering awareness of potentially cheaper options.
Google charges up to 25 percent on its Play Store for Android devices. While Google has relaxed some restrictions on developers linking to alternative payment methods, the company has labeled the analysis as 'bogus,' while also highlighting recent changes that offer UK developers more choices and competitive fees.
The Digital Markets, Competition and Consumers Act 2024 has empowered the CMA to set fee caps and impose fines on Apple and Google. The regulator is expected to make an intervention. Apple defended its fees by stating that developers benefit from the 'immense value' provided by its platforms and technologies, and suggested that any fee reduction might not necessarily be passed on to consumers.