The grip exerted by Apple’s App Store and Google Play on everyone who uses a smartphone is unlike any other business set-up on the planet – and most consumers are unaware of it.

Breaking this stranglehold is one of the most urgent challenges facing the next Prime Minister. Whether that’s Andy Burnham, as expected, or someone else, it will be a serious test of No 10’s dedication to free and fair competition in the UK.

Britain cannot continue to allow tech giants monopolistic privileges that would be unthinkable in any other sector of business. The Government needs to demonstrate that it is on the side of small developers and their customers, not two of the world’s most profitable corporations which have annual turnovers larger than the GDP of many nations.

Whether you have an iPhone or an Android phone, practically all of the third-party software or ‘apps’ that you use have to be downloaded through those two online marketplaces. 

Apple and Google exert total control over what applications can be distributed through these stores and, crucially, take a massive slice of the income for any sales of digital goods or services – with a cut of up to 30 per cent of digital downloads as standard.

That isn’t just £3 in every £10 from the initial sale price of the app. As a general rule, their terms of business expect up to 30 per cent of money spent within the application (what stores call ‘in-app purchases’) and the same for regular subscriptions.

This applies to dating apps, games, music providers and a vast range of other services. It doesn’t affect physical sales: anything purchased in the real world via an app, such as a hotel booking or a taxi journey, is exempt. 

But there’s no such exemption for any digital download. Users will probably have no idea large proportions of every fee they pay go in commission payments to Apple or Google.

This is an ‘app tax’ and it’s stifling many small British developers. They have few options for bringing products to market without going through Apple and Google. But even though smaller businesses get a discount, typically paying a half-rate or 15 per cent, the cost of paying the gatekeepers is too high for many to bear.

The Government would not accept this from other service providers. Credit card companies, for instance, typically charge retailers and banks a proportion of every purchase – but it generally amounts to between one and 3.5 per cent.

Any credit card that tried to take 30 per cent of the price each time would quickly be rejected by shops and customers. But Apple and Google share effective monopolies in their respective ecosystems because more than 95 per cent of UK mobile phones use the Android or iOS operating systems. This obliges app-makers to pay huge fees they cannot afford.

Even large developers find their growth and ability to invest in product development constrained by the costs. Many independent entrepreneurs investing their time and resources in inventing new digital products are being badly affected, even if they qualify for Apple and Google’s discounted fees for small business.

Developers also face restrictions in how they communicate with their customers and have little choice about how they implement payment systems. 

While Google is soon to introduce complex new terms that would allow developers to send customers outside the app to pay – what the industry calls ‘steering’ – it expects a cut of that revenue too. Inevitably many of the costs are passed on to the consumers – so we all end up paying more.

This is an era of innovation, and competition is its rocket fuel, but Google and Apple are throttling the digital economy’s access to competition. No one is suggesting that Google and Apple should be providing their services for free. But commissions of up to 30 per cent are a grossly unjust ‘tax’.

A 2025 report by think-tank IPPR calculated that if the marketplace cut was reduced to 5 per cent – still a higher percentage than any credit card charges – the bonus to UK app developers would be between £1.2billion and £2billion.

The Coalition for App Fairness (CAF) has campaigned against the tax since 2020. We believe even further reductions would deliver even more benefits, giving developers opportunities to grow, expand their offerings, employ more staff, pay more tax and pass on benefits to consumers.

The Government and regulators have the tools to intervene.

In 2024, Parliament gave additional powers to the Competition and Markets Authority, and tomorrow this body is expected to announce a consultation into placing new conduct requirements on Google and Apple. 

This could force them to allow app-makers to ‘steer’ users outside of the app and process payments on their own sites – a lifeline to developers which CAF believes should come at no or extremely low extra cost.

This is a watershed moment. If the new PM is willing to stand up to Big Tech on competition, Britain could become one of the most attractive places in the world for software developers. We will be able to nurture homegrown talent and attract overseas start-ups, in a digital arena where customers pay a fair price. 

If the current situation continues unchecked, with Apple and Google permitted to carry on doing just as they like, we will all be worse off.

Dominic Fean is spokesman for the Coalition for App Fairness.