Digital markets are not utilities: Why steering fee remedies need a different regulatory lens

As digital markets regulation moves from diagnosis to remedy design, policymakers face a critical choice. They can seek to regulate outcomes directly, including by attempting to assess platform fees against notions of cost, value or fairness. Or they can focus on opening up the conditions for competition, choice and contestability, allowing market dynamics to do more of the work.

The distinction matters. In fast-moving digital ecosystems, heavy-handed price intervention risks solving yesterday’s perceived problem while weakening the incentives that support investment, innovation, security and consumer trust.

The debate about app store steering fees illustrates this challenge. In June 2026, the Competition and Markets Authority (CMA) consulted on proposed steering conduct requirements for Apple’s and Google’s mobile platforms, including principles intended to ensure that any fees charged for steering were fair and reasonable.

Where regulators are concerned that developers cannot effectively steer customers to alternative payment options or off-platform channels, the policy objective is understandable: reduce friction, improve transparency and ensure that users and businesses can make informed choices. But the response must be proportionate to the nature of the market and the risks of intervention. Digital platforms are not static utilities. They are multifaceted ecosystems in which users, developers, advertisers, device manufacturers and payment providers interact through a constantly evolving set of services, rules and investments.

A central difficulty with fee regulation in this context is that it can encourage an overly narrow view of value. Traditional regulatory approaches often begin with costs: What does it cost to provide the service, what return is reasonable, and how should common costs be allocated? Those questions can be important in conventional regulated sectors, especially where assets are relatively fixed and service boundaries are clear. They are much less straightforward in digital markets, where value is created across an ecosystem rather than within a single discrete transaction.

An app store does not simply process payments. It provides discovery, distribution, identity, security, trust signals, developer tools, application programming interfaces, consumer protection, fraud prevention, quality assurance and access to a large base of engaged users. Some of these functions are visible at the point of sale; many are not. Some benefit developers directly; others protect consumers or preserve the integrity of the wider ecosystem. Attempting to isolate the “cost” of a particular transaction risks understating the broader economic value of the platform and the long-term investment required to maintain it.

This does not mean fees should be immune from scrutiny, but it does mean that any assessment of fairness needs to recognise the multi-dimensional nature of platform value. A fee that looks high when compared narrowly with payment processing costs may look very different when considered against the full package of distribution, trust, safety, access and ongoing innovation that developers receive. Conversely, a remedy that focuses only on reducing a visible fee may have unintended consequences if it weakens the commercial basis for maintaining quality, security and investment across the ecosystem.

Regulators therefore need to distinguish between two different questions. The first is whether users and developers have practical, meaningful alternative routes available to them. The second is whether the regulator should determine the price of access to a platform directly or indirectly through a formal assessment of fees. The first question is about market openness and effective choice. The second moves towards price setting.

In our view, regulators should exhaust the first route before moving to the second. If the concern is that customers are not sufficiently aware of, or able to use, alternative payment or distribution options, the natural remedy is to improve the functioning of those choices. That may include clearer disclosures, reduced friction, better information on prices, and rules that allow developers to communicate transparently while preserving consumer protection. These remedies can be monitored and adapted over time. They are also more consistent with a pro-competitive approach: create the conditions for rivalry, then observe how market participants respond.

By contrast, a FRAND (fair, reasonable, and non-discriminatory)-style fee assessment or targeted price intervention would require the regulator to make complex judgments about platform value, developer margins, cost allocation, innovation incentives and the appropriate division of surplus between different sides of the market. Those questions are difficult even in mature infrastructure sectors. In dynamic digital services, they are particularly hard to answer in a way that remains accurate, proportionate and future proof.

The policy environment is also changing rapidly. Recent moves in several jurisdictions suggest that platforms are already adapting their commercial and technical models in response to regulatory concerns. These developments show why remedy design should be evidence-led and iterative. Where voluntary or negotiated changes can deliver better steering, clearer information and greater user choice, regulators should assess their effectiveness before imposing more intrusive controls.

This is particularly relevant under the UK’s digital markets regime. The Digital Markets, Competition and Consumers (DMCC) framework gives the CMA a more flexible toolkit than traditional utility-style regulation. That flexibility is valuable. It allows remedies to be tailored to the source of concern, tested against real market behaviour and adjusted where evidence changes. Used well, it can avoid the false precision of detailed price-setting while still addressing conduct that limits choice or weakens competitive pressure.

A staged approach can be attractive in principle: begin with less intrusive measures, monitor take-up, and escalate only if necessary. But the stages must not make price regulation the presumed destination. Low take-up of steering options, for example, may have several explanations. Consumers may prefer integrated payment flows; developers may choose not to promote alternatives; the off-platform journey may not be sufficiently attractive; or the remedy may need clearer design. None of these possibilities automatically implies that the regulator should set or benchmark fees. The evidence should determine the response.

A proportionate approach to digital markets remedies should be guided by four principles:

• Remedies should target the barrier to choice, not attempt to redesign the commercial bargain unless that is clearly necessary

• Assessments should consider the total economic value of the platform ecosystem, including investment in safety, quality, distribution and innovation

• Regulators should use monitoring to understand behaviour before escalating to intrusive intervention

• Any remedy should preserve incentives for both platforms and developers to invest, innovate and improve the user experience

These principles do not favour inaction but disciplined intervention. In digital markets, the risk is not only that regulators do too little; it is also that they do the wrong thing too confidently. A remedy that appears neat in regulatory theory can be blunt in practice if it fails to account for multi-sided value, dynamic investment or consumer behaviour.

The most effective framework will be one that creates competitive pressure, measures outcomes carefully and only escalates where the evidence shows that less intrusive tools have failed.

The current debate over app store steering fees is part of a wider question: How should regulators intervene in markets where value is created through networks, ecosystems and continuous innovation? The answer should not be to import utility-style price controls into digital services by another name. Nor should it be to assume that platform conduct is always self-correcting. The better approach is to use the flexibility of the digital markets regime to identify genuine barriers, test behavioural and transparency remedies, and keep more intrusive tools in reserve, unless the evidence supports their use.

For businesses operating in digital ecosystems, this means the policy debate will increasingly turn on evidence: evidence of how users respond, how developers make commercial decisions, how platform services create value, and how different remedy designs affect investment and innovation. For regulators, it means avoiding the temptation to reach too quickly for price regulation where flexible, market-opening remedies may be more effective. And for policymakers, it reinforces a broader lesson: In dynamic markets, the best regulation is often not the most prescriptive, but the most adaptive.

You can read S&W’s full report on Steering Fees commissioned by the Computer & Communications Industry Association here.