Apple and Google have such a “vice-like grip” on mobile phone operating systems, that millions of UK users are losing out as it is virtually impossible for any other firm to enter and compete meaningfully with a new system.
So says an interim report into mobile ecosystems from the UK’s Competition & Markets Authority, following an investigation launched earlier this year over concerns that Apple and Google have too much control over operating systems (iOS and Android), app stores (App Store and Play Store), and web browsers (Safari and Chrome).
The CMA says Apple and Google are able to control how online content, such as mobile apps and websites, is provided to users. They can also tilt the playing field towards their own services – for example, Apple does not allow any other app store than its own on iPhones and iPads, and its browser Safari comes pre-installed on those. Google’s browser, Chrome, and app store also come pre-installed on most Android devices.
The regulator says it is concerned that this is leading to less competition and meaningful choice for customers. People also appear to be missing out on the full benefit of innovative new products and services – such as so-called ‘web apps’ and new ways to play games through cloud services on iOS devices.
The CMA is also concerned that people could be facing higher prices than they would in a more competitive market, including for Apple phones, app subscriptions and purchases made within apps.
CMA chief executive Andrea Coscelli said: “Apple and Google have developed a vice-like grip over how we use mobile phones and we’re concerned that it’s causing millions of people across the UK to lose out.
“Most people know that Apple and Google are the main players when it comes to choosing a phone. But it can be easy to forget that they set all the rules too – from determining which apps are available on their app stores, to making it difficult for us to switch to alternative browsers on our phones. This control can limit innovation and choice, and lead to higher prices – none of which is good news for users.
“Any intervention must tackle the firms’ substantial market power across the key areas of operating systems, app stores and browsers.”
Both firms argue that many of the controls they set are needed to maintain the security and quality of the overall service to their users, and in some cases to safeguard users’ personal information.
The CMA agrees that these considerations are important but is concerned that Apple and Google are making decisions on these grounds that favour their own services and limit meaningful choice, when other approaches are available.
The report sets out a range of actions that could be taken to address these issues, including making it easier for users to switch between iOS and Android phones when they want to replace their device without losing functionality or data.
It also want to make it easier to install apps through methods other than the App Store or Play Store, including so-called “web apps” and enable all apps to give users a choice of how they pay in-app for things like game credits or subscriptions, rather than being tied to Apple’s and Google’s payment systems.
Finally, the CMA wants to make it easier for users to choose alternatives to Apple and Google for services like browsers, in particular by making sure they can easily set which browser they have as default.
The CMA’s work so far suggests, that Apple and Google would meet the criteria for ‘Strategic Market Status’ (SMS) designation for several of their ecosystem activities, as set out in the Government’s recent proposals to create a new pro-competition regime for digital markets. These proposals may change as a result of the consultation process and any subsequent legislative process, and so will be subject to ongoing review.
If those proposals become law, the Digital Markets Unit (DMU) – which will sit within the CMA – will ultimately be responsible for deciding which ‘big tech’ firms get SMS status. This status will lead to these firms facing legally enforceable codes of conduct to govern their behaviour and to prevent them from exploiting their powerful positions.
With this in mind, the CMA’s current view is that the firms’ market power in this area will be best dealt with through the DMU, which the government has recently proposed powers for. The CMA is also awaiting stronger competition and consumer law powers from the Government, which were recently consulted on.
In the meantime, the CMA has been investigating Apple’s App Store and Google’s Privacy Sandbox proposals over competition concerns. While both examine issues falling within the scope of this study, this work into mobile ecosystems is much broader. The CMA says it will adopt a joined-up approach across all these related cases, to ensure the best outcomes for customers and other businesses.
The CMA is consulting on its initial findings and is calling for responses by February 7 2022. It will be continuing with the second half of the study and expects to issue a final report in June 2022.
In response to the report, Tech & Digital Economy Minister Chris Philp said: “We want the UK to remain a place where all tech firms can thrive and this study underlines the importance of ensuring mobile app stores are fair and competitive.
“Our new pro-competition regime will level the playing field between tech giants and smaller businesses and prevent abuses that could curtail growth and innovation. We are grateful for the CMA’s work to date and look forward to the final recommendations.”
Related stories
ICO and CMA pledge to join forces for the greater good
New digital regulator vows be ‘tough’ on US tech giants
‘Super-regulator’ puts TikTok, AI and adtech on notice
CMA widens probe into use of ‘murky’ online algorithms
CMA ratchets up attack on online advertising duopoly
Tech giants face tailored rules – and fines – in CMA plan
New Digital Markets Unit ‘to bring tech giants to heel’
