As speculation swirls over whether Brussels is about to soften Big Tech rules in EU-US trade talks, Google has made a tactical retreat—but one that underscores the fragility of Europe’s regulatory ambitions.
On Tuesday, Google—Alphabet’s biggest subsidiary—announced it would let app developers in the European Union steer users to external websites for purchases, a practice long restricted on its Google Play store. The move responds to pressure from the European Commission, which in March accused Google of breaching the Digital Markets Act (DMA) by stifling competition. Yet the compromise reveals the limits of Brussels’ leverage.
Fees in the crosshairs
The DMA, designed to curb gatekeeper platforms, has put Google Play—which processes 24 billion updates weekly and hosts over 90 per cent of Android app downloads—under intense scrutiny. In March 2024, the Commission charged Google with blocking developers from “freely steering consumers to other channels for better offers” and criticised its service fee as “higher than appropriate”. This fee, levied when a user first connects with an app via Play, drew particular ire.
Google’s concession, outlined in a blog post by Clare Kelly, its senior competition counsel for Europe, allows EU developers to promote external offers. “While we still have concerns that these changes could expose Android users to harmful content and make the app experience worse, we’re updating our External Offers Program for the EU with revised fees and more options for Android developers, following DMA discussions with the European Commission,” Ms Kelly said. The new fee structure includes a 10% charge on in-app purchases or 5% for subscriptions for the first two years, plus “ongoing services fees” of 17% or 7% respectively. Developers can opt out of ongoing fees—but only if users forfeit security features like parental controls.
Regulatory pressure has a compound effect. Each jurisdiction’s enforcement emboldens others. — analysis by Gadget Hacks
The Commission offered a guarded response. “It is up to Alphabet to ensure compliance with the DMA,” a spokesperson said, adding that Brussels would review the proposal. Google risks fines of up to 10 per cent of global annual revenue—around $3.8bn based on 2024 figures—if found guilty of DMA breaches.
Walled gardens
The clash highlights the EU’s broader campaign to dismantle tech giants’ closed ecosystems. Google’s 30 per cent standard commission on in-app purchases has drawn global regulatory heat, including a $700m settlement with US states last year over “unlawful restrictions” on app distribution. The DMA uniquely targets structural dominance rather than consumer harm, focusing on Google’s role as a gatekeeper. Critics argue the revised fees—which often match or exceed original commissions—amount to “compliance theatre”.
Google’s tactical retreat mirrors moves elsewhere. In India, a $275m fine for Android dominance spurred alternative billing options. A UK probe prompted similar changes. Yet the EU’s penalties—totalling over €8bn for past antitrust breaches—carry unique weight. “Regulatory pressure has a compound effect,” notes an analysis by gadgethacks.com, a server specialising in smartphones. “Each jurisdiction’s enforcement emboldens others.”
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The Play Store changes coincide with a shifting app economy, now valued at $1.7tn. Smartphone usage has surged from 27 to 70 per cent of the global population in a decade, amplifying the stakes. Google’s concessions aim to pre-empt deeper disruption, but developers gaining leverage to negotiate terms or explore rivals could, over time, erode its grip.
Minimal disruption for users
For Android users, the changes may prove imperceptible. Most will still download apps via Play, albeit with more off-ramps to external deals. Google claims over 90 per cent of developers are “satisfied” with its billing—a figure critics attribute to “learned helplessness” in a market with few alternatives. Larger developers, however, now have leverage to push for better terms.
While we still have concerns that these changes could expose Android users to harmful content and make the app experience worse, we’re updating our External Offers Program for the EU with revised fees and more options for Android developers. — Clare Kelly, Europe competition counsel at Google
The Play Store saga tests whether the DMA can reshape tech markets or merely extract token concessions. Google’s history of “reluctant compliance” suggests the latter. Yet Brussels’ resolve appears firm. The Commission’s terse statement—“It is up to Alphabet to ensure compliance”—signals vigilance.
For now, the ball is in Google’s court. Its revised fees and external offers may placate regulators temporarily. But with a 10 per cent revenue fine looming and global regulators circling, the tech giant faces mounting pressure to cede more ground. The EU’s success—or failure—in this clash could define the next decade of digital markets. If the DMA’s bark proves worse than its bite, Brussels’ bid to rule the tech world may end up as just another app that crashes.
