Apple and Google can take a breath after the U.K. competition watchdog announced Wednesday it’s closing a pair of investigations into their respective mobile app ecosystems, citing administrative priorities.
Since March 2021, the U.K. regulator had been investigating Apple’s conduct in relation to the distribution of apps on its iOS and iPadOS mobile devices, with a particular focus on terms and conditions (T&Cs) governing developers’ access to its App Store. Since June 2022, a similar probe had also been looking into Google’s conduct around app distribution on Android devices, including looking at its Play Store rules for its own billing system for in-app purchases. The Competition and Markets Authority (CMA) had said it was concerned the pair’s T&Cs may unfairly limit developers’ choice.
The CMA also previously found substantial grounds for concern over the pair’s mobile duopoly.
Nonetheless, it’s now shuttered both probes without taking any action.
But any relief from Apple and Google at this regulatory reprieve is likely to be brief, as the CMA has said its overarching reason for closing the probes is an expectation of being able to use new competition powers that will allow it to apply special abuse controls on tech giants with strategic market power.
Writing in a press release, the CMA said it will look to the incoming digital markets regime to “resolve app store concerns.”
It also wrote that it “anticipates that its early work under the new digital markets competition regime will build on and leverage its experience in areas it has already studied, such as mobile ecosystems, which includes app stores” — giving its clearest signal yet that Apple and Google are first in line for special abuse controls.
Commenting in a statement, Will Hayter, executive director for digital markets at the CMA, added: “Once the new pro-competition digital markets regime comes into force, we’ll be able to consider applying those new powers to concerns we have already identified through our existing work.
“It’s critical that tech businesses in the U.K., including app developers, can have access to a fair and competitive app ecosystem, helping to grow the sector, boost investment and result in better outcomes for U.K. consumers. These are all factors we are considering before launching our first investigations under the new regime.”
The U.K.’s rebooted digital markets regime has been in the works for years — greenlit as far back as November 2020 but hit with legislative delays as a result of the political turmoil from chopping and changing conservative governments in recent years.
Finally, in April last year, the plan was revived and the Digital Markets, Competition and Consumer bill ended up being rushed through parliament in the “wash-up” ahead of the May 2024 general election — meaning the CMA is finally poised to wield powers to crack down on Big Tech once the regime comes into force (which it expects “later this year”).
“In light of recent developments, in particular the passing in May of the Digital Markets, Competition and Consumers Act (DMCCA), the CMA has assessed its existing Competition Act investigation into Google’s Play Store and its parallel case into Apple’s App Store rules against its administrative priorities and decided to close these cases at this point,” the CMA wrote.
“Should Apple or Google each or both be designated as having ‘strategic market status’ in connection with any digital activities in the mobile sector, the CMA will be able to use its new powers to consider the range of issues raised by parties more holistically than it otherwise could under these specific Competition Act investigations. This will also enable the CMA to consider what, if any, interventions may be needed following any designation.”
U.K. developers hoping for the regulator to take swift action to reboot the Apple and Google duopoly will still need to wait longer, though. The DMCCA requires the CMA to undertake investigations to determine whether a tech giant’s market power meets the law’s bar of “strategic market status” (SMS) — and, if so, designate it as subject to the regime.
In January, the CMA said it expected to undertake three to four investigations to determine SMS in the first year of the regime coming into force. So there could still be quite some delay before any U.K. Big Tech crackdown can happen.
In one sign of potentially tougher operating conditions coming down the pipe for platform operators under the rebooted approach, it’s notable the CMA rejected commitments that had been submitted by Google in response to concerns about Play Store terms under its (now shuttered) investigation. Had the CMA accepted the commitments, it could have limited the scope of remedies it may otherwise order on Google under the digital markets regime, assuming (as is highly likely) it ends up being designated as having SMS.
The CMA said Google’s proposals would have given app developers the ability to use alternative payment options to its Play’s billing system, under proposals known as “Developer-Only Billing” and “User Choice Billing.” But after consulting with developers, and reviewing feedback and available evidence, the CMA said it was not satisfied Google’s proposed commitments addressed its competition concerns effectively — hence taking the decision to reject it.
“Feedback from app developers suggested Google’s proposals to allow app developers to use alternative payment methods for in-app payments did not go far enough and they would in practice remain tied to the Google payment system,” it wrote. “In particular, app developers referred to the level of commission they would still be paying to Google, and to the proposed ‘pop-up screens’ that might put users off completing a transaction.”
How the CMA designs any future interventions on designated tech giants will be one to watch, as the DMCCA gives the regulator leeway to make bespoke interventions tailored to the specific platform and problems it identifies — setting the U.K.’s approach apart from the more prescriptive competition reboot — the Digital Markets Act, known as the DMA — that’s already up and running in the European Union.
However, the DMA’s fixed list of dos and don’ts have applied to Apple and Google since early March, when the EU regime came into force on designated gatekeepers. So the U.K. continues to lag far behind the bloc when it comes to tackling platform power.
