Digital Markets, Competition and Consumers Bill

Written evidence submitted by GlobalCharge Limited (DMCCB04)

in respect of the
Digital Markets, Competition and Consumers Bill

GlobalCharge Limited (incorporated 2007) is a Saffron Walden, Essex based payment service provider offering ecommerce clients a variety of payment methods.

In 2008, Apple and Google introduced their app stores. GlobalCharge saw an opportunity, and although Apple never allowed third party payment processors to operate within their ecosystem, Google did, so GlobalCharge developed software targeting app developers in this exciting new sector. In 2011 we introduced an accredited in-app billing solution on the Android platform through direct carrier billing (a popular and simple means by which end-users pay for premium content through their pre or post-pay mobile account).

In 2012 Google changed their Terms and Conditions such that only app developers, principally in the dating sector, that operated under a Digital Content Exception, were permitted to use third party payment providers such as GlobalCharge. This action effectively cut us off from most of the addressable market. Even where the favourable exclusion applied, many businesses that we approached decided not to use third party payment providers for fear of reprisals by Google. Despite this, we were able to operate at scale with a few loyal customers – we processed £80 million of ‘end user spend’ for one client between 2016 and 2021.

In 2021, all our remaining in-app clients reluctantly turned us off in order to comply with Google’s updated terms causing further severe economic damage to GlobalCharge.

GlobalCharge has lost the chance to process hundreds of millions of pounds of end-user spend by virtue of our unfair exclusion from both Apple and Google’s app store billing systems.

The CMA has stated that the current investigation is not concerned with the service fee that Google is proposing to charge and has focused instead on whether Google is abusing its dominant market position by enforcing the exclusive use of GPB. In our opinion the two are inextricably linked. Google’s decision to make it mandatory for app developers to use Google Play Billing (GPB) in 2012 was a clear abuse of their dominant position in the marketplace with fees of 30%, completely out of step with comparable payment services. (GlobalCharge fees are typically 4%)

Fast forward to today and what Google is proposing is to lift the need to use GPB but to keep their fee (or at least most of it). Their market dominance is still being abused with money being extracted via another route - in our view, it is the commercial terms as a whole which cause harm to app developers and payment processors such as GlobalCharge and reduce overall competition in the marketplace.

The suggested ‘Service Fee’ (Google’s Proposed Commitments) will continue to impact GlobalCharge. The payment fees associated with direct carrier billing vary by country; mobile network and tariff. In the UK DCB fees are approximately 18%. (Approximately 14% to the mobile Operators and 4% to GlobalCharge). A high cost, but for digital content (such as a dating subscription) the benefits of single click billing outweigh the higher fees.

If a merchant wants to offer direct carrier billing under the User Choice Billing (UCB) scheme they’ll be required to pay the GlobalCharge/DCB of 18% fee plus 26% to Google. No developer would entertain such fees.

Credit card processors might have more success. Their fees will generally be far lower than ours so for some app developers who prefer to use their own card processor instead they’ll be no worse off financially under the proposed new arrangements but that still leaves Google able to exploit their market dominance to extract unreasonably high and unwarranted ‘service fees from app developers who have few other alternatives to reach their customers.

So, for GlobalCharge the proposed changes will have no impact – we’ll still be effectively shut out of the Android eco-system. The CMA should not be accepting commitments that shut out some types of competitors from the market and therefore deny app developers a free choice of providers.

For these reasons we hope that the CMA will reject Google’s proposal and see it for the token gesture it is.

June 2023

 

Prepared 14th June 2023