The App Tax shows who really holds power in Britain’s digital economy

They're right to be concerned. While the regulator hesitates, consumers and UK tech firms continue paying the price through a hidden charge that affects almost every smartphone user in Britain. What many developers call the App Tax.

Whenever someone in the UK pays for an app, subscription or in-app purchase through Apple or Google's app stores, these companies can take up to 30% of that transaction - a fee with little justification beyond market power. That is UK developers handing over up to 30p in every pound to Apple or Google.

And the consequences are real. Consumers pay higher prices, British developers keep less from every sale, and billions that could support innovation, hiring and growth in the UK instead flow to two of the world's largest corporations.

We built xigxag to give readers an independent, affordable alternative to the Big Tech giants dominating the audiobook market. But as a UK developer, we're forced to use Apple and Google's in-app payment solutions, which means our customers are forced to transact with American Big Tech instead of the local brands they want to support. We can't even direct our own customers to buy through our website as Apple and Google prohibit it.

In sectors like audiobooks, listeners are being doubly penalised. Long before Apple or Google applies their platform fees, consumers are hit with a 20% VAT rate - making audiobooks the only reading format denied zero-rated tax status. This arbitrary barrier disproportionately harms those who rely on audio to access their books, including neurodiverse and visually impaired audiences.

This matters now because Britain has already spent years recognising the problem and building the legal framework to address it.

The Digital Markets, Competition and Consumers Act (DMCCA) was introduced because policymakers increasingly accepted that traditional competition law was too reactive to deal with the dominance of modern technology platforms. By the time regulators completed lengthy investigations, markets had often already tipped decisively in favour of the largest players.

The legislation was designed to change that. It gives the Competition and Markets Authority (CMA) new powers to intervene earlier and more directly where companies hold entrenched market power over critical digital infrastructure, including app stores and mobile operating systems.

So the debate is no longer about whether the UK needs these powers. Parliament has already granted them. The real test is whether the CMA is prepared to use them to stand up for British consumers and developers, or buckle to pressure from Big Tech.

One of the CMA's first major tests under the new regime is fast approaching: whether developers should finally be allowed to direct users towards alternative payment methods outside app stores, something Apple and Google have long restricted.

The CMA already has the authority to act under the DMCCA. But there are growing concerns that, instead of imposing binding remedies capable of fostering genuine competition, the regulator will settle for weak voluntary commitments from the platforms themselves - promises that lack the strict penalties and legal teeth built into the DMCCA.

In fact, this would be a profound mistake. The UK would be signalling to dominant big tech behemoths that British law is negotiable - and to every UK developer that when it mattered, nobody fought for us.

Other countries are moving faster. In the United States, courts are increasingly challenging Apple and Google's conduct. The European Union has also brought in changes to app store rules. Yet Britain risks falling behind at exactly the moment it claims to want to become a world leader in technology and innovation.

Small developers like us do not have the power to negotiate with trillion-dollar companies. That is why regulators exist. Every pound lost to the App Tax is a pound not spent hiring a developer, improving a product, or lowering prices for consumers.

The Government says it wants growth. It says it wants to ease the cost of living and for Britain to lead in tech. The CMA now has a chance to help deliver all three without spending a penny of taxpayers' money. The question is whether it dares to do it.

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Kelli Fairbrother is the co-founder & CEO of xigxag.

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