CMA axes Google and Apple app store probes - for now

The Competition & Markets Authority has been forced to wind up key investigations into Google’s Play Store and Apple’s App Store without ruling whether the two tech giants are in breach of competition law as it plans for the roll out of the new digital markets regime.

While the CMA has not taken any decisions on what digital activities it will tackle first, it anticipates that its early work under the new regime will build on its experience in areas it has already studied, such as mobile ecosystems, which includes app stores.

The CMA opened these cases because it is concerned that Google and Apple are using their market positions through the Play Store and App Store respectively to set terms which may be unfair to UK app developers and which may restrict competition and consumer choice, potentially leading to higher prices and reduced choice for app users.

The cases focused on the rules that require app developers offering digital content, such as games, to use Google Play’s or Apple’s own billing systems for in-app purchases, which the CMA is concerned limit developers’ choice of payment solution and make it more difficult for them to deal directly with their customers.

The move comes at the same time as the CMA rejects commitments submitted by Google in response to the CMA’s concerns. Google’s proposals would have given app developers the ability to use alternative payment options to Google Play’s billing system, under proposals known as ‘Developer-only Billing’ and ‘User Choice Billing’.

Having consulted app developers, and after reviewing their feedback as well as the available evidence, the CMA says it is not satisfied that Google’s proposed commitments address its competition concerns effectively.

Feedback from app developers suggested Google’s proposals to allow them 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. 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.

In light of recent developments, in particular the passing in May of the Digital Markets, Competition & Consumers Act 2024 (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 new regime gives the CMA the ability to impose requirements on the conduct of firms in digital markets where those firms have been designated as having “Strategic Market Status” and to impose significant fines against firms if those requirements are breached.

The regulator has confirmed it expects to launch around up to four such investigations within the first year of the new digital markets competition regime coming into force, which is expected later this year.

However, it has not judged whether Apple or Google each or both will be designated as having “Strategic Market Status” in connection with any digital activities in the mobile sector.

If they are designated such status, the CMA insists it 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.

CMA executive director for digital markets Will Hayter said: “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 UK, 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 UK consumers. These are all factors we are considering before launching our first investigations under the new regime.”