The UK’s Competition and Markets Authority (CMA) has launched a full investigation into the firms’ dominance of mobile web browsers after a consultation found substantial industry concerns.
The announcement follows the publication of the CMA’s Mobile Ecosystem Market Study report, which found that Apple and Google have an effective duopoly on mobile ecosystems, which was harming UK-based web developers and cloud gaming service providers, holding back innovation and adding unnecessary costs.
The survey concluded that this market dominance allowed the two companies to “exercise a stranglehold over operating systems, app stores and web browsers on mobile devices”.
The CMA’s findings state that 97 per cent of all mobile web browsing in the UK in 2021 occurred on browsers powered by Apple’s Safari or Google’s Chrome, meaning any restrictions on these engines can have a major impact on users’ experiences.
There are already more than 800,000 users of cloud gaming services in the UK but restrictions on their distribution on mobile devices could hamper growth in this sector, the CMA has said.
Moreover, the developers surveyed by the CMA also raised concerns regarding Apple’s restriction on cloud gaming through its App Store.
“We want to make sure that UK consumers get the best new mobile data services, and that UK developer can invest in innovative new apps,” said Sarah Cardell, interim chief executive of the CMA.
“Many UK businesses and web developers tell us they feel that they are being held back by restrictions set by Apple and Google. When the new Digital Markets regime is in place, it’s likely to address these sorts of issues. In the meantime, we are using our existing powers to tackle problems where we can,” she continued.
The CMA said its investigation will now consider these points and whether new rules are needed to drive better outcomes for users in the UK.
Both Apple and Google have argued the control and restrictions it places on developers is to better protect users.
In a 15-page response to the CMA’s announcement, Apple denied that its activity around mobile browsers amounts to a restriction on competition.
“The potential remedies under contemplation by the CMA risk removing this choice and thus actively restricting competition at an ecosystem level,” it added. “Any action that would result in such a loss of consumer choice and competition should be avoided.”
Apple added that it would “continue to engage constructively with the Competition and Markets Authority to explain how our approach promotes competition and choice, while ensuring consumers’ privacy and security are always protected.”
In its own 10-page response to the consultation, Google stressed Android’s “openness” and claimed that its smartphone platform offers “users and businesses more choice than any other”.
“Android gives people a greater choice of apps and app stores than any other mobile platform,” the company said. “It also enables developers to choose the browser engine they want, and has been the launchpad for millions of apps.
“We’re committed to building thriving, open platforms that empower consumers and help developers build successful businesses.”
Google also argued that the main issues identified by the CMA at that stage are not found in its mobile ecosystem and that its proposed remedies are not “well suited for consideration or implementation in the context of a market investigation”.
As part of his Autumn Statement, UK Chancellor Jeremy Hunt announced last Thursday that the government would present a draft of the Digital Markets Competition & Consumers Bill before May 2023.
The new measures that would empower the CMA and Digital Markets Unit (DMU) to rein in abusive tech giants by dropping the turnover threshold for immunity from financial penalties from £50m to £20m, and hiking potential maximum fines to 10 per cent of global annual income.
According to the CMA, the new rules would address the “sorts of issues” raised in Apple and Google’s dominance over mobile ecosystems, and provide the watchdog with new regulatory powers as early as October next year.
The CMA’s investigation is required to end within 18 months of its start. If the watchdog finds evidence of anti-competitive behaviour, it can impose remedies on firms and make recommendations to the government on regulation.