The competition landscape in the UK has witnessed a notable development as the nation’s competition watchdog has decided to wrap up its ongoing investigations into Apple and Google over concerns regarding their app store practices. Since early 2021, the Competition and Markets Authority (CMA) has been scrutinizing Apple for the way it manages app distribution on iOS and iPadOS, particularly looking at the company’s App Store terms and conditions and their impact on developers. In mid-2022, Google also came under investigation for similar reasons concerning Android app distribution and the Google Play Store’s in-app purchase billing system.
Despite the CMA identifying significant grounds for concern regarding the mobile market dominance of these two tech giants, it has concluded both investigations without taking action. This closure, however, does not signify an end to regulatory scrutiny for Apple and Google; it is merely a prelude to a more empowered CMA. The closure reflects the CMA’s anticipation of stronger competition powers that will soon be enacted through the UK’s new digital markets legislation.
The CMA has expressed its intention to use the forthcoming Digital Markets Competition and Consumer bill to tackle app store concerns more effectively. This new legislation will equip the CMA with the ability to impose specific abuse controls on companies deemed to have strategic market status (SMS) within the technology sector. The regulator has indicated that experience gained from its initial investigations into the mobile ecosystems will inform its future actions under the new framework, possibly placing Apple and Google as primary targets for these new powers.
Will Hayter, CMA’s executive director for digital markets, highlighted the importance of a fair and competitive app ecosystem for UK tech businesses, including app developers. The upcoming pro-competition digital markets regime is expected to enable the CMA to address the concerns identified through earlier work and to consider openings for potential interventions once a company is designated with SMS.
The UK’s digital markets regime has been in the making for some time, facing delays due to political changes. Nonetheless, the act that will reshape the regulatory environment, the Digital Markets, Competition and Consumers Act (DMCCA), has been expedited through parliament and is set to be enforced later in the year. With this act, the CMA will be positioned to more holistically assess issues raised by market participants than it could under the specific investigations it had been conducting.
One indication of the more robust framework that is approaching is the CMA’s refusal to accept commitments from Google pertaining to the Play Store terms, suggesting that the authority is gearing up for stronger interventions under the new regime. Developers voiced that Google’s proposals for alternative payment methods did not adequately address competitive concerns, leading the CMA to reject these proposals.
Looking ahead, the CMA will have to conduct investigations to determine if specific tech giants possess SMS and enact tailored interventions based on its assessments. This approach will differ from the European Union’s Digital Markets Act, which already enforces a set of rules on designated gatekeepers, including Apple and Google. Where the UK’s forthcoming legislation might lead in terms of regulation and the nature of future interventions on tech giants remains to be seen, suggesting a pivotal moment for the UK’s competitive landscape in the digital sphere.
